City Union Bank (CUBK IN) – Q1FY27 Result Update – Margin trajectory a key monitorable – BUY
Published on 29 Jul 2026
CUB saw a decent quarter with core PPoP beating PLe by ~11% led by better NII and lower opex. Fee was a miss due to lower processing fees driven by softer loan offtake. Bank reiterated guidance of growing loans 2-3% above industry; we are factoring loan CAGR of 17.5% over FY26-28E. Portfolio mix is guided to be: gold at 31-32%, MSME at 55-60% and secured retail 10%. We raise NIM for FY27/28E by 5bps but trim fees by ~10%; net impact on core PAT is mildly positive. One-time ECL impact could be 60-65bps while sustainable effect on credit costs may be 4-5bps. We keep multiple at 1.7x but increase TP to INR 250 from INR 233 as we roll forward to Sep’28 ABV. Retain ‘BUY’.
