9 CUB share price target reports by brokerages below. See what is analyst's view on CUB share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
We remain positive on CUBK on account of its consistent earnings, stable asset quality, healthy CAR and superior return ratios. We have tweaked our loan growth expectations to ~18% over FY19-21E while impact on asset quality from MSME exposure will be eyed upon. Maintain BUY with a target price of Rs 236 (2.9x FY21E ABV).
Change to Buy with a revised TP of INR 237 CUBK is well positioned to expand its credit book at a CAGR of 19% over FY19-21E coupled with a slight moderation in margin due to slow growth in CASA. On the asset quality, it is expected to post gross slippages and credit cost, well within guidance. As a result, we expect a ROA of 158bp in FY20E vs its past 10-year average of 155bp. We change our rating to Buy from Accumulate with a revised TP of INR 237 from INR 244 on 3.2x (from 3.4x) one-year forward P/ABV.
Core trends intact The strong headwinds of rising costs and lower yields pushed down City Union’s NIM. However, with its asset quality more stable than its peers, sturdy capitalisation and focused SME and retail lending strategy, we expect its good profitability to endure in the medium term. We retain our Buy recommendation, with a lower TP of `226 (earlier `228).Our Aug’20 target of `226 is based on the two-stage DDM model. This implies a ~2.7x P/BV and ~3.0x P/ABV multiple on its FY21e book.Risks: Higher slippages, lower than-expected loan growth.
No impact from concerns about the wider economy City Union Bank (CUBL) reported 1QFY20 results with the key pointers being: (1) GNPA ratio moved up 39 bps QoQ to 3.34% but management retained prior slippage guidance of 1.75-2% for FY20 (2) Margin contracted 13 bps YoY to 4.11% and management guided for similar margin for FY20 plus or minus 20 bps (3) While loan growth dipped to 14% YoY, management reiterated loan growth guidance of 18-20% for FY20 (4) Management reiterated cost to income ratio of ~42% and RoA of ~1.5% for FY20 (5) There are incipient signs of management warming up to third party distribution fees (See comprehensive conference call takeaways on page 2 for significant incremental colour). We have revised our NII estimates by 0.0%/-1.8%, PPOP estimates by -0.4%/-3.2% and PAT estimates by -1.9%/-7.1% for FY20/FY21, respectively. We have retained Buy rating on CUBL, valuing the stock at 2.5x FY21E P/BV and revised our target price to Rs234 (from Rs248 earlier).
The bank has consistently delivered healthy business growth along with keeping a tab on asset quality. CUB has guided at maintaining RoAs >1.5%+ and RoE ~15%, going ahead, on the back of healthy credit growth of 18- 20%, strong margins and controlled asset quality. Though, we remain cautious on MSME exposure from asset quality perspective, however, we continue to prefer CUB as it is well placed among regional players and comfortable on the capital front with tier-I ratio at 15%. CUB has historically traded at a premium to other regional banks due to better return ratios and a consistency in earnings. We maintain our BUY rating with unchanged target price of | 240 implying a multiple of 2.7x FY21E BV.
We continue to maintain our positive stance on CUB, due to its sustainable performance. Our positive view on CUB is based on higher margins (best in banking sector), consistent superior return ratios (RoA: 1.64%, RoE: 15%) and strong CAR. We maintain our ‘Hold’ rating on the stock with a revised target price of Rs 223 based on P/ABV(x) of 2.8 (x) to its FY 21E ABV.
The bank has consistently delivered healthy business growth along with a tab on asset quality. CUB has guided at maintaining RoAs >1.5%+ and RoE ~15%, going ahead, on the back of healthy credit growth of 18-20%, stable margins and controlled asset quality. We continue to prefer CUB as it is well placed among regional players and comfortable on the capital front with tier- I ratio at 15%. CUB has historically traded at a premium to other regional banks due to better return ratios and a consistency in earnings. We maintain our BUY rating and target price of Rs 240 (earlier Rs 225) valuing at a multiple
CUBK is our preferred regional (and amongst mid-tier) bank as a result of its (1) Conservative management, (2) Superior NIMs due to its unparalleled lending franchise, (3) Well capitalised B/S , (4) Steady operating efficiency, (4) Lower stressed assets with a near nil watch list and (5) Huge MSME lending opportunities and (6) Superior return ratios across cycles. We have estimated around 16% CAGR in NII, 17% CAGR in earning and 20% CAGR in loan book between FY18-21E. We estimate its RoAE and RoAA to improve to 15.6% and 1.54% respectively in FY21E. Currently, it trades at ~2.8x FY20E and 2.4x FY21E adjusted Book Value (ABV). Given the consistent growth and controlled asset quality, we believe the bank will demand higher valuation compared to other peers. We recommend CUB a BUY at CMP Rs. 197 and add on dips to Rs. 188 for the price Target of Rs. 236 over the next 4 to 5 Quarters.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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