Buy City Union Bank; target of Rs 200: ICICI Direct

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ICICI Direct's research report on City Union Bank

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.

Outlook

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 all recommendations report, click here

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