City Union Bank Ltd Techno-Funda Research Report By IDBI Capital

Return ratios to stay healthy: CUB delivered 15.6% RoE and 1.5% RoA with 10x leverage in
FY16. The scope to expand leverage and RoE therefore remains strong. As stated earlier, we
expect CD ratio to stay stable though the incremental loan growth should continue to stay
robust, adding to incremental leverage. We believe CUB’s RoE/RoAs should sustain above
FY16 levels with a positive bias.

Valuations: CUB trades at 14.8x FY16 basic EPS Rs7.44 and 2.15x FY16 BV Rs51.0. Presuming a
sustained profit momentum of ~14% FY16-FY18E, CUB’s EPS should increase to Rs9.67 in
FY18E. At a P/E multiple of 15x FY18E EPS, CUB could trade at a fair value of Rs145.