01 — At a Glance
The Sleeper Stock: Growth Without the Drama
- 52-Week High / Low₹324 / ₹143
- Q3 FY26 Revenue₹1,756 Cr
- Q3 FY26 PAT₹332 Cr
- Q3 EPS (₹)₹4.48
- Annualised EPS (Q3×4)₹17.92
- Book Value₹134
- Price to Book1.88x
- Dividend Yield0.78%
- Debt / Equity7.22x
- 1-Year Return+71.7%
Year Opener: City Union Bank just delivered a 21% YoY credit growth to ₹60,892 crore — the fastest expansion in 28 quarters. Deposits grew 21% to ₹70,516 crore. Net NPA collapsed to 0.78% from 1.42% YoY. The stock returned 71.7% in one year. And it’s still trading at 14.9x P/E — below the banking sector median. Every institutional investor walked past this. Your grandfather’s bank is quietly becoming a monster.
02 — Introduction
Tamil Nadu’s Unloved Banking Gem That’s Quietly Printing Money
City Union Bank was founded in 1904. No, not 2004. Nineteen. Hundred. Four. It’s older than the Reserve Bank of India itself. For 121 years, it’s been doing the same boring thing: lending to small traders, farmers, and MSME owners in South India. No technology pivots. No cryptocurrency experiments. No AI announcements. Just steady credit growth, boring asset quality metrics, and consistent quarterly profits.
And somehow, this ancient institution has become a 21% credit growth machine. Seven consecutive quarters of double-digit advances growth. Highest expansion rate in 28 quarters. All while managing GNPA at 2.17% (down from 3.36% a year ago) and deploying ₹1.5 lakh crore+ in customer deposits.
The stock rallied 72% in a year. The book value reached ₹10,000 crore for the first time. Net worth crossed 10K crores. A new MD is being appointed by RBI (effective May 1, 2026). Interim stewardship is cleaning up the balance sheet like it’s going out of style. And nobody on Dalal Street seems to have noticed.
This is a story about execution, capital discipline, and what happens when a 120-year-old bank finally decides to get serious about growth. Let’s unpack it with data, irritated commentary, and the kind of clarity that usually requires a ₹50,000 equity research subscription.
Concall Summary (Feb 2026): MD Dr. N. Kamakodi noted it was his “59th quarter” — a poetic way of saying his 15-year tenure ends April 30. His parting gift: the highest credit growth in 28 quarters. Glass ceiling or glass exit? We report, you decide.
03 — Business Model: Show Me the Regional Banking
A Lender’s Lender in South India That Suddenly Learned to Scale
City Union Bank is a scheduled commercial bank (45 years, actually — even older if you count pre-independence era lending). Its core constituency: MSME traders, small farmers, retail workers, and the unorganized sector in South India. Cash-and-carry wholesalers. Vegetable vendors. Micro-industrialists running small textile units. The segments nobody glamorous wants to lend to.
Their lending book is segmented: Cash Credit & Demand Loans (65%), Term Loans (34%), Bills Purchased (1%). Geography: 875 branches as of March 2025, with 550 branches (63%) in Tamil Nadu. That’s not diversification — that’s specialization. The bank knows Tamil Nadu’s MSME ecosystem better than anyone. Competing banks from the north are trying to crack it; City Union Bank already owns it.
The Gold Loan portfolio is ₹14,270 crore (27% of gross advances, 18% of which is agri-gold). Fixed-rate, seasonal, 12–24-month tenor, 60%+ LTV. Industrial loans growing at 12–13% annually. Retail focus on LAP, home loans, and affordable rural housing through branch sourcing. They’re not competing against HDFC Bank on metro mortgages — they’re competing against moneylenders, unorganized finance, and themselves from last quarter.
Agriculture17%Loan Portfolio
Retail Traders12%Portfolio Mix
Gold Loans27%Portfolio Share
Deposits₹70,516 CrGranular Retail
Scale without Geographic Breadth: 550 out of 875 branches (63%) are in Tamil Nadu. Management is now targeting northern and western India expansion. Question for you: is concentrated excellence better than diluted mediocrity? City Union Bank is betting yes.
💬 How many of you’ve actually walked into a City Union Bank branch? Or did you only know about it because your Tamil friend insisted on it? Drop a comment!
04 — Financials Overview
Q3 FY26: The Profit Machine Keeps Humming
Result type: Quarterly Results | Q3 FY26 EPS: ₹4.48 | Annualised EPS (Q3×4): ₹17.92 | FY25 Full-year EPS: ₹15.16
| Metric (₹ Cr) |
Q3 FY26
Dec 2025 |
Q3 FY25
Dec 2024 |
Q2 FY26
Sep 2025 |
YoY % |
QoQ % |
| Interest Income | 1,004 | 891 | 987 | +12.7% | +1.7% |
| Operating Profit | 417 | 361 | 414 | +15.5% | +0.7% |
| OpM % | 41.7% | 40.5% | 41.9% | +120 bps | -20 bps |
| PAT | 332 | 286 | 329 | +16.1% | +0.9% |
| EPS (₹) | 4.48 | 3.86 | 4.43 | +16.1% | +1.1% |
Annualised P/E Math: Q3 FY26 EPS ₹4.48 × 4 = ₹17.92. CMP ₹252 ÷ ₹17.92 = P/E 14.05x on annualised basis. FY25 full-year EPS was ₹15.16. Current P/E on trailing 12-month: ₹252 ÷ ₹15.16 = 16.6x. Still 8–10% cheaper than the banking sector median of 17.5x. Interest income grew 12.7% YoY despite rate cuts. PAT growth at 16.1% — someone is doing the math right.
05 — Valuation: Fair Value Range
What’s This Regional Banking Gem Actually Worth?
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