City Union Bank‘s share price extended its winning streak for the third straight day on Wednesday, May 14, gaining another 2% in trade to touch a 28-month high of ₹195 apiece. The stock last traded at these levels in December 2022. With the steady rise, shares are now approaching their record high of ₹249.35, last seen in January 2020.
The stock has maintained a consistent upward trend since the beginning of May, as investor sentiment improved following the lender’s return to a growth trajectory in the March quarter. This recovery was driven by its ongoing digital transformation efforts, which also prompted brokerages to raise their target multiples, further fueling the rally.
Notably, the stock ended both April and March in the green, with gains of 12.33% and 6.35%, respectively. The rally has extended into the current month, with the stock rising another 10% so far.
Following the bank’s in-line performance, Axis Securities revised its target price on City Union Bank to ₹225 apiece, maintaining its ‘Buy’ rating.
Likewise, IDBI Capital retained its ‘Buy’ rating with a target price of ₹215. Anand Rathi also maintained a ‘Buy’ with a 12-month target of ₹218, while Prabhudas Lilladher raised its target to ₹210 from ₹200, reiterating its ‘Buy’ stance.
City Union Bank Q4FY25 results snapshot
City Union Bank reported a 13% YoY increase in net profit to ₹288 crore for the quarter ended March 2025, driven by stronger fee income, particularly from insurance and processing charges. Net Interest Income (NII) rose 10% YoY to ₹600 crore, while Net Interest Margins (NIMs) improved marginally by 2 basis points, as the bank shed lower-yielding loans.
Pre-provision operating profit surged 25.3% YoY to ₹441 crore. Credit costs remained largely stable at 60 basis points, compared to 61 bps in the previous quarter. Non-interest income saw robust growth of 43% YoY to ₹251 crore, supported by strong fee-based revenues.
On the asset quality front, gross NPA improved to 3.09% from 3.36% QoQ, driven by higher write-offs. Management remains confident of further improvement in asset quality, supported by controlled slippages and healthy recoveries.
For FY26, slippages are expected to decline to ₹650–700 crore, compared to ₹815 crore in FY25. Looking ahead, the bank aims to maintain the business momentum it has gained in FY25 while targeting a sustainable Return on Assets (RoA) of 1.5%.
Axis Securities highlighted potential NIM pressures in the coming quarters due to yield compression in the EBLR-linked loan book. However, the brokerage believes that the impact will be cushioned by multiple initiatives undertaken by the bank to offset margin declines.
Axis expects City Union Bank to deliver consistent RoA and RoE of 1.5–1.6% and 12–14%, respectively, over FY26–27E, supported by strengthening fee income, steady NIMs, and controlled credit costs despite higher operational expenses.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
