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City Union Bank up 5% on Q1 results; brokerages retain Buy, here's why
At 12 PM, CUB's share price was trading 3.2 per cent lower at ₹219.2 per share on the NSE. In comparison, NSE Nifty50 was down 0.46 per cent at 24,656 levels. The market capitalisation of the bank stood at ₹16,271 crore. The stock has recovered 50 per cent from the 52-week low of ₹142.91 touched on March 27, 2025.
City Union Bank Q1 results
City Union Bank reported a 16 per cent year-on-year (Y-o-Y) increase in net profit to ₹306 crore during the June 2025 quarter (Q1FY26) compared to ₹264 crore in the year-ago period. The private sector lender's total income increased to ₹1,849 crore in the reported quarter from ₹1,580 crore in the same quarter of FY25.
The Tamil Nadu-based bank's net interest income (NII) grew 15 per cent to ₹625.3 crore from ₹545.2 crore in Q1FY25. The bank's asset quality showed an improvement as gross non-performing assets (NPAs) declined to 2.99 per cent at the end of the June quarter from 3.88 per cent a year ago. Similarly, net NPAs declined to 1.2 per cent, as against 1.87 per cent in the year-ago period.
City Union Bank Q1 results analysis - JM Financial
According to analysts at JM Financial, with a strong capital position (CAR at 23.1 per cent), a robust technology platform enabling scalable co-lending partnerships, and the ability to preserve margins, the bank is well-positioned to sustain its growth trajectory. The bank's minimal exposure to unsecured segments further underpins its resilient asset quality.
The bank's net profit increased 6 per cent quarter-on-quarter (Q-o-Q), supported by 4 per cent Q-o-Q growth in NII and stable operating expenses. However, net interest margins (NIMs) moderated by 6 basis points sequentially, 3.5 per cent, though management expects them to remain steady, aided by deposit re-pricing in Q2FY26.
"At 1.3x FY27E BVPS, the stock offers a compelling risk-reward profile. Sustained growth momentum, improving operating leverage, and prudent risk management should support further re-rating," the brokerage said in a note.
JM Financial raised its FY26 earnings estimates by 5 per cent to factor in better-than-expected operating performance and build in average ROA/ROE of 1.5/13 per cent over FY26E–FY27E. The brokerage maintained a 'Buy' rating with a revised target price of ₹250, valuing the bank at 1.6x FY27E BVPS.
Emkay Global
Emkay Global raised earning estimates for FY26-28E by 2-4 per cent, factoring in the better growth and asset quality outcome. Anlysts believe that CUB's healthy growth, coupled with strong RoA delivery (1.5-1.6 per cent over FY26-28E), capital buffers, and improving retail orientation, would help sustain premium valuations.
The brokerage retained 'Buy' rating on the stock with revised target of ₹250 (up 19 per cent), now valuing the stock now at 1.5x Jun-27E ABV from 1.4x Mar-27E ABV earlier.
However, it flagged macro deterioration hurting asset quality, higher ECL hit, KMP attrition in its retail banking team as key risks for the businesses.
About City Union Bank
City Union Bank is a scheduled commercial bank in the private sector. It has a major presence in the urban, semi-urban and rural centres in South India. It offers a wide range of banking and financial services, including commercial banking and treasury operations. CUB's product portfolio includes savings accounts, current accounts, fixed deposits, cash certificates, VIP deposits, Flexifix deposits, CUB Smart deposits and tax saver gold deposit account. The main focus of the bank is lending to MSMEs, retail and wholesale trade, with a granular asset profile, including providing short-term and long-term loans to the agricultural sector.
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