City Union Bank Share Price Jumps Over 12% As Second Quarter Results Enthuse Analysts

City Union Bank Ltd.'s share price surged over 12% to reach the upper circuit on Tuesday, as various brokerages expressed their positive sentiment towards the stock following the bank's better-than-expected net profit in the quarter ended September.

The bank's net profit rose 1.42% year-on-year to Rs 285 crore in the quarter ended Sept. 30, 2024, according to an exchange filing. Analysts covered by Bloomberg had expected the bank to post a net profit of Rs 272 crore.

Net interest income for the quarter was up 8% at Rs 582 crore, compared to Rs 538 crore in the same quarter a year ago. Gross non-performing assets improved sequentially to 3.54% as against 3.88%, and net NPA was at 1.62% as against 1.87%.

Yes Securities said that the bank showcases positive outcomes as the lender's various parts of the return-on-assets tree are behaving well, including balance sheet growth, asset quality, and net interest margins. The brokerage maintains its 'buy' rating for the stock with a target price of Rs 195 apiece, implying more than 29% upside.

IDBI Capital also maintains a 'buy' and a higher target price of Rs 200, implying an upside of 33% from the previous close. It said credit growth has remained subdued in fiscal 2024 at 6% year-on-year as against pre-pandemic double-digit growth, and it said the bank reported improvement in credit growth in the first half of this fiscal, which should support re-rating.

Nirmal Bang's branch-level checks indicate improved turn-around time, which should lead to improved volume and loan growth going ahead. The brokerage said that it believes our meaningful re-rating will depend on two factors, including continued growth traction going ahead, especially the success of retail products being launched and being on track with asset quality improvement in order to keep credit costs lower.

The brokerage has a 'hold' rating with a target of Rs 163, implying 8.2% upside.

The stock rose as much as 12.45% to Rs 169.39 apiece, the highest level since Sept. 24, after having the 10% upper circuit was revised during early trade. It pared gains to trade 12% lower at Rs 168.75 apiece as of 9:53 a.m. This compares to a 0.29% advance in the NSE Nifty 50 Index.

The stock has risen 13% on a year-to-date basis and 22% in the last 12 months. Total traded volume so far in the day stood at 13.52 times its 30-day average. The relative strength index was at 62.5.

Out of the 24 analysts tracking the company, 22 maintain a 'buy' rating, one recommends a 'hold,' and one suggests a 'sell,' according to Bloomberg data. The average 12-month consensus price target implies an upside of 11.1%.