City Union Bank Gets 'Buy' Upgrade From ICICI Securities, Says Risk-Reward Favorable At Current Valuations

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ICICI Securities Report

We upgrade City Union Bank Ltd. to Buy with an unchanged target price of Rs 200, valuing the stock at ~1.45x FY26E adjusted book value, broadly in-line with forward RoAs. Post ~17% stock price correction in the last month, City Union Bank’s valuation at ~1.1x forward book is near its lowest in the last three years – juxtaposed with an improved growth outlook and NIM resilience.

While yield pressure in the rate easing cycle is comparable to peers, the recent downward revision (50–75 bps in select buckets) in savings rate balances should cushion the bank’s NIM profile ahead.

Amidst systemic moderation in growth, management remains confident of 12–14% YoY credit growth and negative slippages in the near term. Concerns emanating from the gold loan circular and draft guidelines on foreclosures charges seems overdone.

Key risk: Slower-than-expected growth.

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