Moneycontrol Pro: City Union Bank shares in focus; here's why
In a few ideas for profit from Moneycontrol Pro, Neha Dave talks about a stock that she is tracking closely, City Union Bank.
In a few ideas for profit from Moneycontrol Pro, Neha Dave talks about a stock that she is tracking closely, City Union Bank.
The bank’s loan growth has slowed down to 5 percent as of December end as it mainly focused on gold loans and Emergency Credit Line Guarantee Scheme (ECLGS) lending in the past two years.
Going forward, the bank will be targeting a double-digit loan growth in FY23. City Union Bank’s asset quality has also sharply deteriorated as it mainly lends to self-employed and MSMEs both of which were severely impacted by the pandemic.
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Bank’s credit cost has increased, which has impacted its profitability in the current fiscal. The bank stock has corrected 32 percent from its peak and the valuation has moderated to 1.2 times one year forward book value estimated for FY23 which is way lower than its three-year historical average valuation of around 2.6 times one year forward book value. Investors can consider this stock as it offers attractive risk reward after the recent correction.
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First Published: Mar 25, 2022 11:44 AM IST
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