Q2FY19 results highlights
Valuation and view
While earnings improved sequentially profitability still remains weak. More importantly the PCR ex technical write-offs has declined to below 50%. Also CET1 falls short of the requirement of 8% by March 2019. While the government is likely to infuse some capital we do not know if it will be of the order of Rs68bn that the bank needs. Further the dilution will be big given the below book valuation. With capital shortage and low PCR, we maintain Neutral despite cheap valuations. We are downgrading our target multiple further to 0.3x from 0.35x earlier. Our new TP is Rs71 versus Rs90 earlier.
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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