Hold City Union Bank; target of Rs 150: Centrum Research

November 17
02:42 2017

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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