Hold City Union Bank; target of Rs 150: Centrum Research
Centrum’s research report on City Union Bank
We retain Hold on CUBK with TP at Rs150 (valued at 2x FY19E ABV). Q2’18 results beat our estimates on all fronts – strong NII / further expansion in NIM / healthy PPOP and respectable profits. The trend in slippages seems to be stabilising; overall stressed asset portfolio (GNPA + restructuring) at 3.1% of loans, remains lower amongst peer set banks.
While we like CUBK’s business model, valuations at 2.3x FY19E ABV limit near-term upside. Retain Hold with TP at Rs150 (valued at 2x FY19E ABV). CUBK is a compounding story and we suggest accumulating the same at lower levels. Key risks: concentration risk, lower growth.We continue to like CUBK for its growth strategy, capital position and returns profile. Current valuations at 2.3x FY19E ABV appear reasonable.
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