Buy City Union Bank, target of Rs 31: Karvy

Karvy Stock Broking has recommended a buy rating on City Union Bank with a target price of Rs 31 in its January 12, 2009 research report. "In 3QFY09, we expect that the bank's net advances would grow by 29% (Y/Y) to Rs 51.6 billion and deposits would grow by 20% (Y/Y) to Rs 76 billion; we expect that the bank's NII would grow by 13% (Y/Y) to Rs 558 million; the bank's margin is expected to be under pressure due to higher costs of deposits. We estimate 21% (Y/Y) growth in bottomline to Rs 308 million. At current price, the stock quotes at 0.65x adjusted book value FY2010; we rate the stock as a BUY with a price target of Rs 31 at 1.45x adjusted book value FY2010," says Karvy's research report.
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