Buy City Union Bank; target of Rs 236: HDFC Securities

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26 Aug, 2025 12:21

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HDFC Securities' research report on City Union Bank

Yet again, CUBK performed consistently, across parameters. Loan growth was steady and broad based at 17%, fees grew ~16%, NIMs improved ~10bps sequentially, CASA (24%) and the PCR (65%) remained stable. Superior performance can be inferred from a closer look at the fine print: NIMs driven by growth in avg loans, sequential SA growth of ~8% (after 3% in 2Q), a stable net stressed book (even after the slippages of the large paper exposure of ~Rs 800mn) and conservative coverage (~46%) on the SR book.

Outlook

Given these virtues, we assign a target multiple of 3xDec-20E ABV to arrive at a TP of Rs 236. Maintain BUY.

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