Q4FY18 results highlights
Valuation and view:
Management guided to slippage of 3% in FY19 (~Rs95bn) with Rs60bn likely to be corporate of which Rs50bn will be from thermal power. These power accounts are currently fully standard. Management has guided to credit cost of 2%. While mgmt. has guided to GNPAs reducing to below 12% from 16% currently our estimate of GNPA for FY19 is higher at 14% as we have built in lower recoveries. We expect profitability to remain weak with RoA of 0.2% for FY19 and 0.5% for FY20E. The stock has corrected sharply and has limited downside but with weak profitability, high duration of 4.6 years on AFS, a high stock of stress loans and low capital we do not see upside either. We cut our TP sharply on weak profitability but upgrade to Neutral on price correction. Our TP of Rs90 is based on 0.36x PBV FY20E.
City Union Bank Limited is a banking company. The Bank's segments include Treasury, Corporate and Wholesale Banking, Retail Banking and Other Banking Operations. It offers personal banking, corporate banking and non-resident Indian banking services. Its online banking services include utility bill payments, mobile banking, online shopping, book railway ticket and verified by Visa. It offers CUB Mobile Banking-mBank Plus, Mobile Passbook (mPassbook), immediate payment service (IMPS) in Internet banking for funds transfer across the banks and digital signature authentication for corporates as second factor authentication for Internet banking. It operates automated teller machines (ATMs) in approximately 1,320 locations, including over 660 off-site ATMs. It has installed check acceptor KIOSKs and self passbook printing KIOSKs. It offers CUB mobile wallet, which is a mobile-based software application and caters to customer utility services through mobile phone.
IDFC Securities Ltd., a subsidiary of the Infrastructure Development Finance Company (IDFC) wherein the Government of India holds a 20% interest, is India's leading equities broker catering to most of the prominent financial institutions, both foreign and domestic investing in Indian equities. A research team of experienced and dedicated experts ensures the flow of critically investigated stock ideas and portfolio strategies for our clients. Our coverage spans across various growth sectors such as agriculture, automobiles, Consumer Goods, Technology, Healthcare, Infrastructure, Media, Power, Real Estate, Telecom, Capital Goods, Logistics, Cement amongst other sectors. Our clients value us for our strong research-led investment ideas, superior client servicing track record and exceptional execution skills.
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