Geojit has given Buy recommendation for City Union Bank with a target price of Rs. 208 in its research report issued on Feb 08, 2021
Geojit’s research report on City Union Bank
City Union Bank Ltd (CUB), the oldest private sector bank in India, is a mid-sized commercial bank headquartered in Tamil Nadu, having a network of 700 branches and 1,780 ATMs spread across the country and a loan book size of Rs.35,437cr. Total Business grew by 8% YoY with advances growing at 8% supported by strong growth in ECLGS (Emergency Credit Line Guarantee Scheme) and Gold Loan. Net Interest Income grew by 14% YoY with NIM improving by 20bps YoY and 4bps QoQ. We expect Advances to grow at a CAGR of 8.8% and Deposits to grow at CAGR of 10.5% over FY20-23. GNPA/NNPA stands at 2.94%/1.47% against 3.44%/1.81% during Q1FY21 on account of lower recognition. We expect elevated slippage levels, however, expect it to be in control due to restructuring of MSME books.
We recommend Buy rating on the stock with a revised roll forward target price of Rs 208 based on 2.5x Adj BVPS of FY23E.