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Buy City Union Bank; target of Rs 220: Prabhudas Lilladher

Prabhudas Lilladher is bullish on City Union Bank has recommended buy rating on the stock with a target price of Rs 220 in its research report dated November 05, 2022.

November 07, 2022 / 08:47 PM IST
 
 
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Prabhudas Lilladher's research report on City Union Bank

CUBK saw another a strong quarter with core earnings at Rs2.3bn beating our estimates by 13% led by better NII and asset quality. Loan growth was higher at ~13% YoY and bank is confident of achieving 15-18% loan growth in FY23E. Slower deposit growth would not hamper near term asset accretion as bank carries excess liquidity of Rs30-35bn. Quarterly NIM at 4.14% was higher by 9bps and we expect NIM for FY23 to improve by 20bps YoY as EBLR linked pool is higher at 65%. GNPA reduced by 29bps QoQ to 4.4% due to higher recoveries. CUBK has been surpassing its guidance with earnings quality improving each quarter.

Outlook

We raise FY23/24 PAT by 10%/7% and expect RoA/RoE to reach 1.6%/15% in FY25E. We increase multiple from 1.9x to 2.0x and further re-rating would hinge on higher loan growth and stress reduction. Roll forward to Sep’24 ABV and revise TP from Rs190 to Rs220. Retain BUY.

For all recommendations report, click here

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City Union Bank - 05-11-2022 - prabhu

Broker Research
first published: Nov 7, 2022 08:47 pm

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