City Union Bank share price in focus: Private sector lender City Union Bank saw its shares strengthen for the second consecutive session on Tuesday, November 4, gaining another 8% to hit a fresh all-time high of ₹254 apiece after nearly six years.

The stellar September quarter numbers ignited a fresh wave of rally, extending the bank’s winning momentum, causing it to spike nearly 50% in 2025 so far.

City Union Bank Q2 performance

The bank reported better-than-expected numbers for the September quarter, driven by stronger NII growth, controlled operating expenses, and lower provisions. It reported a 15% rise in net profit to ₹329 crore.

Interest income improved to ₹1,653 crore from ₹1,434 crore in the same period a year ago. During the quarter, operating profit increased to ₹471 crore from ₹428 crore a year ago.

The bank reported its highest loans and deposits growth in a decade, with loans and deposits growing at 19% and 21% YoY, respectively.

In terms of asset quality, gross non-performing assets (NPAs) of the bank eased to 2.42% of gross advances at the end of September 2025, from 3.54% a year ago. Similarly, net NPAs came down to 0.9% at the end of September 2025 compared to 1.62% a year ago. As a result, provisions and contingencies declined to ₹57 crore from ₹70 crore in the second quarter of the last financial year.

Growth visibility healthy

According to domestic brokerage Axis Securities, the bank’s growth engine has started to fire, with credit growth at a decadal high (+18% YoY / +7% QoQ in Q2), and the management remains confident of sustaining the momentum, supported by healthy growth visibility in the MSME and gold segments and a gradual ramp-up of the retail segment.

Despite robust growth delivery in H1FY26, significantly above industry levels, the management has reiterated its guidance of maintaining credit growth 2–3% above industry growth, which the brokerage believes is conservative. However, the bank is not averse to accelerating the pace of growth without compromising on asset quality.

The bank is on track to ramp up its retail portfolio, supported by its branch network (90% mix) and the DSA channel (10% mix), and expects to break even in FY26 and turn RoA accretive from FY27 onwards.

JM Financial believes City Union Bank is well positioned to sustain its growth trajectory, with sufficient capital adequacy of 21.7%. The bank’s legacy in underwriting and managing the MSME portfolio, along with minimal exposure to unsecured retail, further underpins its resilient asset quality.

“We maintain our loan growth estimates at 15% over FY25–28E with an average ROA/ROE of 1.5%/13% for FY26–28E,” it said.

Analysts expect the stock price to rise as high as ₹285

Axis Securities maintained its ‘buy’ recommendation on the stock with a price target of ₹275 apiece, supported by improved growth visibility and strong performance on asset quality.

JM Financial, too, retained its ‘buy’ call on the stock with a higher target price of ₹285 apiece. The brokerage said sustained growth momentum, prudent risk management, and improving operating leverage should aid further re-rating.

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