CUB - Fundamental Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Fundamental Rating: 3.5

Let’s decode the fundamentals of City Union Bank (CUB)—a private sector bank with solid regional presence but moderate return efficiency 🏦📊

📘 Core Financials Snapshot

Profit Performance

PAT grew from ₹288 Cr. to ₹306 Cr., marking a 15.7% quarterly jump — a healthy uptick.

EPS of ₹15.7 supports a reasonable profit base for its current pricing.

Return Metrics

ROE: 12.6% is moderate — decent shareholder return but not industry-leading.

ROCE: 6.86% reflects underutilization of capital resources.

Debt & Liquidity

Debt to Equity: 6.94 🚨 — high, but typical for banks. Indicates aggressive lending or deposit-driven growth.

Cash flow data not specified, though operational results seem stable.

📊 Valuation Overview

Metric Value Interpretation

P/E Ratio 13.6 Slightly above industry PE (12.2); fairly valued

P/B Ratio ~1.67 Acceptable; priced reasonably close to book

PEG Ratio 0.98 Promising — near 1 means growth is keeping up with valuation

Dividend Yield 0.94% Modest, adds income layer for long-term holders

Intrinsic Value Estimated ~₹190–₹205 Slightly stretched at ₹214

🔍 Valuation-wise, the stock isn’t overpriced, but may not offer strong discount entry either.

🧬 Business Model & Health Check

Well-established retail and SME banking presence, particularly in Tamil Nadu and South India.

Conservative asset book and lower exposure to volatile sectors reduce risk.

Recent dip in FII holdings (–0.66%) but notable rise in DII holdings (+2.16%) suggests confidence from domestic institutions.

📈 Technical Outlook & Entry Points

RSI: 55.2 — neutral with a slight bullish tilt.

MACD: Positive, confirms upward momentum.

Price above both DMA 50 (₹205) and DMA 200 (₹183) — technical strength on trend charts.

🎯 Entry Recommendation

Accumulate between ₹195–₹205

Avoid aggressive entry above ₹215 unless backed by strong breakout volume.

🕰️ Long-Term Holding Guidance

🟢 Decent for a 3–5 year horizon if seeking stable, region-focused banking exposure.

⚠️ Moderate ROCE and high leverage mean upside could be capped unless earnings accelerate.

Suitable for portfolio diversification rather than aggressive alpha generation.

Want to compare CUB against peers like DCB Bank or Karur Vysya? I can line up a detailed comparison and valuation matrix next 📊💬

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