Buy City Union Bank: target of Rs 180: Sharekhan

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Sharekhan's research repor on City Union Bank

City Union Bank (CUBK) posted in-line with expectations results; asset quality was largely stable with improving PCR. Margin also improved on a sequential basis. Asset quality improved on a sequential basis, with GNPA at 3.44% and NNPA at 1.81% for H1FY2021, down 65 bps/48 bps from FY2020. Moreover, PCR improved by 200 bps q-o-q to reach 70%. CUBK’s management commentary was encouraging with management indicating better pickup in business volumes and indicated growth to return in Q4 (from Q1FY2022 guided earlier).

Outlook

CUBK currently trades at 1.8x/1.5x its FY2022E/FY2023E book value, which we believe is reasonable; We recommend Buy on the stock with a PT of Rs. 180.

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