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Buy City Union Bank; target of Rs 164: HDFC Securities

HDFC Securities is bullish on City Union Bank has recommended buy rating on the stock with a target price of Rs 164 in its research report dated August 14, 2020.

August 19, 2020 / 11:06 AM IST
 
 
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HDFC Securities' research report on City Union Bank


CUBK’s 1QFY21 earnings were ahead of our estimates on account of lower-than-expected operating expenditure and higher-than-expected treasury gains. Expectedly, sequential balance sheet growth was negligible. The sharp reduction in the proportion of the portfolio under moratorium to just ~12.5% was heartening, and the bank’s performance on this front is significantly better than that of its peers, despite its high share of SME loans.


Outlook


We maintain a BUY with a target price of Rs 164 (2.1x FY22E ABV). Our assigned multiple reflects the bank’s (1) strong PPOP profile and capital position, which are capable of absorbing shocks, and (2) consistent performance across most parameters. It remains our preferred pick amongst the mid-tier banks.


For all recommendations report, click here

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first published: Aug 19, 2020 11:06 am
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