City Union Bank Daljeet Singh Kohli, IndiaNivesh

ET Now: Let us talk about City Union Bank. We have seen a lot of these small and midsize banks starting to make a move up. It has happened with Federal, it has happened with Karnataka and it has happened in a small way with City Union Bank. Do you like City Union Bank even now at these levels? Daljeet Singh Kohli: We call City Union Bank an NBFC with a banking license. So it is actually working more like an NBFC. If you look into their loan books, you will find that it is very granular in nature. They have consciously taken a decision in the last 1.5-2 years to move away from large corporates and to go to small and medium enterprises. In most of the cases, if you will go deeper into their loan book, they are sole financers for small and mid sized companies. About 60-70% of the book is of that kind which means that they have full control on their borrowers and because they have local knowledge. They are mostly concentrated in Tamil Nadu and there they have their local knowledge, regional understanding of the business and are able to steer them away from all these vagaries of asset quality. Now that is the reason why when all the other banks were facing so much of NPA problem, this bank hardly had any increase in the NPAs in the last four quarters. In terms of valuation, even now it is trading at 1.8 times of FY18 adjusted book value which, I think, is much cheaper than its comparative peers. So we thought that this is a place where there is potential. Even if you give it two times of book value you will still get Rs 118 kind of target.

Daljeet Singh Kohli, IndiaNivesh