City Union Bank Ltd. share price target

Mixed earnings with moderate Balance Sheet growth

Earnings grew by 16% y-o-y, led by lower provisions, although operating profits fell by ~10% y-o-y.
Total credit cost stood at 34 bps of average advances (annualized) versus 29 bps q-o-q and 142 bps y-o-y.

We initiate coverage on City Union Bank (CUB) with a “BUY” recommendation
and a target price of Rs 205, valuing the bank at 1.5x of its FY26E Adj. BV.

After the extended downtrend and volatility, CUBK has rallied 12% in the past one week. We believe the recent up-move in the stock is fueled by receding asset quality
woes, bottoming of credit growth (with regulatory interventions largely behind), and recent elevation of Executive President R Vijay Anandh (from RBL) to Whole-time
Director, thus paving the path for his succession (from current MD & CEO Kamakodi, who will step down in 2026).

We maintain our BUY recommendation on the stock on reasonable valuations.

Despite broadly stable ~1.5% RoA over the last two years, City Union Bank’s (CUBK) stock has underperformed peers due to concerns about subdued loan growth / NIM performance in arguably one of the strong NIM cycle in recent times.