City Union Bank - Company Update - ICICI Direct

City Union Bank (CUB) reported a decent number on the operating front with an improvement in margins and controlled costs. Business growth, however, was on the slower side as the management still maintains a cautious approach and would review situation in coming quarters, before stepping on the accelerator. Currently, incremental disbursement has only been towards gold loans, ECLGS. On ~9.03% of advances, the bank did not receive even a single payment during moratorium vs. 12.45% in June 2020. Also, 90.5% of bank exposure received payments demanded in September.

Valuation & Outlook

A continued conservative approach and yield led pressure on margin is expected to keep the operational performance muted with a gradual pick-up in H2FY22E, as the tide turns towards normalcy. Sequentially, asset quality has improved but the quantum of loans that would be coming up for restructuring and slippages number in coming quarter would be key to monitor. We remain positive on fundamentals and upgrade the recommendation from HOLD to BUY with a revised target price of Rs. 200 (Rs. 130 earlier), implying a multiple of 2.6x FY22E BV.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_CityUnionBank_CoUpdate_Dec20.pdf

Shares of CITY UNION BANK LTD. was last trading in BSE at Rs.174.35 as compared to the previous close of Rs. 173.8. The total number of shares traded during the day was 103594 in over 1778 trades.

The stock hit an intraday high of Rs. 177 and intraday low of 173.7. The net turnover during the day was Rs. 18179538.

Source : Equity Bulls

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