ICICI Direct is bullish on City Union Bank has recommended buy rating on the stock with a target price of Rs 240 in its research report dated August 09, 2019.
ICICI Direct's research report on City Union Bank
City union bank reported healthy operating profit of Rs 351 crore on back of higher other income (led by treasury gain of Rs 45 crore). Growth in NII came marginally lower at 11.3% YoY to Rs 417 crore, led by contraction in margins. Margins contracted by 13 bps YoY & 29 bps QoQ to 4.11%, on back of rise in cost of fund. Credit growth came lower compared to previous run rate at 14.2% at Rs 32229 crore with growth in MSME & wholesale trader book at 12% & 15% YoY respectively. Deposit growth came healthy at 16% YoY at Rs 39077 crore on back of ~20% YoY & 17% YoY growth in savings & term deposit. However, accretion in current account remained muted. Accordingly, CASA ratio stood at 23.4%, down 48 bps YoY & 178 bps QoQ.
We maintain our BUY rating with unchanged target price of Rs 240 implying a multiple of 2.7x FY21E BV.
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