Buy City Union Bank; target of Rs 190: ICICI Securities

ICICI Securities is bullish on City Union Bank recommended buy rating on the stock with a target price of Rs 190 in its research report dated October 22, 2024.

Broker Research

October 22, 2024 / 10:36 IST

Buy

26 Aug, 2025 12:21

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ICICI Securities research report on City Union Bank

City Union Bank (CUBK) reported better than our expected set of results with Q2FY25 PAT of INR 2.85bn (9% beat; RoA of 1.59%) aided by improved asset/earnings quality. Despite fifth consecutive quarter of net slippages, provisions increased QoQ as the bank improved PCR (to 55%) and reduced net NPA to 1.62%. Loan growth accelerated further to ~12% YoY (up 5% QoQ) driven by traditional products. Despite the launch of new retail products being pushed-out to Q4FY25, management sounded confident on growth converging towards systemic growth by FY25. LDR, at 83%, is comfortable and CET 1 is strong at 21.98%; though reported LCR nosedived to 121% (vs. ~260% QoQ). We also like CUBK’s stance of improving PCR and paring net NPA as the current stress formation seems negligible.

Outlook

We raise our target multiple to ~1.4x (vs. ~1.3x earlier), broadly in-line with forward RoA. On balance, we upgrade CUBK to BUY (from Add) with a revised target price of INR 190 (vs. INR 180). A key risk is lower loan growth impacting operating leverage.

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