Buy City Union Bank target of Rs 205: Asit C Mehta

Asit C Mehta is bullish on City Union Bank has recommended buy rating on the stock with a target price of Rs 205 in its research report dated May 05 2025.

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May 05, 2025 / 10:29 IST

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Asit C Mehta report on City Union Bank

City Union Bank (CUBK) reported Q4FY25 results broadly in line with our estimates, with a beat on the advances/deposits (advances/deposits were 2%/5% higher than our estimates). The MSME/JL non-agri segment mainly led the growth in advances, while the wholesale segment remained muted. The bank maintained caution on the personal lending segment as it reported a decline of 5.3% QoQ/11% YoY. NIMsreported a marginal decline of 6bps YoY to 3.6% (in line with our estimates), mainly due to February repo cut transmission. Asset quality improved during the quarter as GNPA/NNPA reported a decline of 90/72bps YoY, mainly led by the lower slippages and higher recovery.

Outlook

We expect its advances/deposits to grow at a CAGR of 15% over FY25-27E, while NII/PPOP/PAT shall be expected to grow at 17%/20%/19%. The bank is currently trading at 1.2x/1.1x of its FY26E/27E Adj. BV. We maintain ‘Buy’ on City Union Bank with a target of Rs 205. We value the bank at 1.3x of its FY27E Adj. BV.

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