Synopsis:- Brokerage maintains a ‘Buy’ with ₹350 target, implying ~46% upside from ₹239. Credit growth guidance remains strong at 18–20%, with stable margins of 3.8–3.9%. Asset quality improved sharply, GNPA at 2.17%, while exposure of ₹50–60 billion to MSMEs remains a key monitorable.
India’s private sector banks, numbering 21, drive innovation and efficiency in banking. In FY2025 (latest full-year data), they mobilized Rs 85 lakh crore in deposits and extended Rs 75.7 lakh crore in gross loans, with CASA ratio at 37.71%, showing robust growth amid H1 FY2026 credit expansion of ~9-11% YoY. These banks hold ~35-40% household deposit share, fueling retail and digital lending.
With a market capitalisation of Rs 17,825.70 crore, the shares of City Union Bank Ltd closed at Rs 239.90 per share, decreased around 6 percent as compared to the previous closing price of Rs 253.30 apiece.
Brokerage Recommendation
Emkay Global Financial Services has maintained a bullish stance on the bank, assigning a ‘Buy’ rating with a target price of Rs 350. This implies a potential upside of around 46% from the current level of Rs 239.90, reflecting confidence in the bank’s growth outlook, improving fundamentals, and ability to deliver steady performance ahead.
Rational
As per the brokerage, the bank continues to guide for strong credit growth of 18–20%, supported by MSME and retail segments. However, rising geopolitical tensions in the Middle East are a key monitorable. Early signs of cost pressures are emerging, especially for MSMEs in textile and packaging segments.
The bank has exposure of around Rs 50–60 billion to the Tirupur textile cluster and remains closely engaged with clients. While borrowers have not yet sought support like restructuring, short-term funding costs have increased. Despite this, management has held lending rates steady and maintained margin guidance of 3.8–3.9%.
Asset quality trends remain encouraging, with GNPA improving sharply to 2.17% from 5.6% earlier, and net slippages turning negative. Provision coverage has strengthened to 64%, while SMA levels remain stable at around 4%, indicating limited immediate stress and resilience among SME borrowers despite external challenges.
The company delivered a healthy performance in Q3FY26, with revenue rising 19% from Rs 1,479 crore to Rs 1,756 crore, indicating strong business momentum. Net profit also grew 16% to Rs 332 crore, reflecting improved operational efficiency. While growth remains solid, slightly lower profit growth compared to revenue suggests some pressure on margins during the quarter.
Over the past year, operating performance showed steady improvement. Operating profit rose from Rs 361 crore in Dec 2024 to Rs 417 crore in Dec 2025, reflecting healthy growth. Operating profit margin (OPM) remained stable around 24–25%, indicating consistent cost control and efficiency, despite rising expenses, supporting overall profitability momentum.
City Union Bank is a well-established private sector bank in India, known for its strong presence in MSME and retail lending. With a focus on conservative lending and asset quality, the bank has built a stable franchise, catering mainly to small businesses while maintaining steady growth and disciplined risk management over the years.
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
