City Union Bank Share Price Hits Highest Since Dec 2022, Jumps 10% in May

City Union Bank Share Price Soars 2% to Reach Highest Level Since December 2022, Gains 10% in May

Chennai, May 14, 2025 – City Union Bank Ltd (CUB), one of India's prominent private sector banks with a stronghold in Tamil Nadu, witnessed a sharp surge in its share price on Tuesday. The stock gained nearly 2% intraday to reach ₹161.45 on the NSE, marking its highest level since December 2022. This rally extends the bank's impressive upward trajectory this May, where it has already clocked a solid 10% return for investors.

A Closer Look at the Recent Price Action

Over the past few weeks, City Union Bank has been silently outperforming broader banking peers. On May 1, CUB was trading around ₹146, and as of today's high, it has climbed more than ₹15 in less than two weeks — a clear signal of renewed investor interest. While large-cap names like HDFC Bank and ICICI Bank often dominate headlines, mid-tier banks like CUB are quietly stealing the spotlight with consistent performance and attractive valuations.

The rally in May has been supported by a broader bullish sentiment in the midcap banking space, combined with stock-specific catalysts like improving asset quality, stable credit growth, and strong rural lending performance.

What’s Driving the Momentum?

Several fundamental and technical factors are fueling the optimism surrounding City Union Bank. Let’s break them down:

1. Improved Q4 Earnings Outlook

Investors are anticipating a strong Q4FY25 earnings report from the bank later this month. While official numbers are yet to be released, early management commentary has pointed toward higher net interest income (NII), stable margins, and improved provisioning buffers. Analysts expect the bank to report a YoY PAT growth in the range of 20–25%, bolstered by lower credit costs and higher loan disbursements.

2. Asset Quality Trends

City Union Bank has made commendable progress in cleaning up its balance sheet post-COVID. As of Q3FY25, Gross NPAs stood at 3.45%, down from 4.12% a year earlier. Net NPAs too showed a decline, reflecting the bank’s disciplined recovery mechanisms and cautious lending strategy.

This improvement in asset quality has not gone unnoticed by institutional investors. Several domestic mutual funds have increased their stake in CUB over the past two quarters.

3. Technicals Turning Bullish

From a technical standpoint, CUB has broken key resistance levels around ₹158 that had held firm for over a year. With the 200-day and 50-day moving averages now aligning in a bullish crossover, the momentum indicators like RSI and MACD also signal a positive trend.

According to technical analysts, if the stock sustains above ₹160 levels for the next few sessions, it may eye the ₹170–175 zone in the short term.

Mid-Tier Banks Are Gaining Investor Attention

While PSU and large-cap private banks have long been the go-to options for investors, the recent market trend has shown a clear shift toward mid-tier banks that offer better risk-reward ratios. CUB is well-positioned in this bracket, with a consistent dividend policy, strong regional presence, and conservative lending practices.

This shift is further supported by favorable macro indicators like stable repo rates, rising credit demand from SMEs, and government push for financial inclusion in Tier 2 and Tier 3 cities — all of which align with CUB’s core operating zones.

Foreign and Institutional Buying on the Rise

Increased buying interest from FIIs and DIIs has further buoyed the stock price. According to NSE data, institutional holding in City Union Bank increased from 41.2% in December 2024 to 43.6% in March 2025. Notably, marquee names like SBI Mutual Fund and ICICI Prudential Mutual Fund have upped their exposure, hinting at their confidence in the bank’s long-term story.

Expansion and Digital Push

City Union Bank’s plans to modernize its digital offerings and expand into newer geographies have also played a role in boosting market sentiment. The bank recently rolled out AI-powered customer service features and is in the process of strengthening its UPI and mobile banking platforms to compete with larger players.

CEO Dr. N. Kamakodi stated in a recent media interaction, “Digital is no longer a choice; it is a necessity. We are investing in building a tech-first ecosystem for our customers without compromising our conservative credit culture.”

Analyst Views and Forward Guidance

Brokerages have turned cautiously optimistic on CUB. Here's a snapshot of current ratings:

Analysts agree that while the stock has rallied quickly, its valuations are still not overstretched. The price-to-book (P/B) ratio of 1.6x remains modest compared to industry averages.

What It Means for Investors

For existing shareholders, the recent rally validates CUB’s long-term value. For new entrants, the stock still offers potential upside — especially if the upcoming earnings meet or beat expectations.

However, short-term traders should be cautious of profit booking at higher levels. Experts advise using any dip toward ₹155–157 as an accumulation opportunity for medium to long-term gains.

Key Financials Snapshot (as of Q3FY25)

What to Watch Going Forward

1. Q4FY25 Results – Set to be released in the next 2–3 weeks. A beat on PAT or NII could provide another leg up.

2. Management Commentary – Any forward-looking statements regarding expansion, asset quality, or digital transformation will be closely tracked.

3. Regulatory Announcements – RBI’s monetary policy in June and any sector-specific reforms could influence valuations.

City Union Bank’s resurgence is not merely a product of speculative buzz — it reflects deeper structural improvements, sound governance, and renewed confidence in India’s mid-tier banking landscape. As the bank crosses its highest price since December 2022, investors should take note of the underlying story: a traditional institution steadily adapting to modern times while rewarding its stakeholders.

With a 10% return in just half of May, the stock is showing early signs of becoming a 2025 outperformer in the midcap banking space. Whether you’re a retail investor or a portfolio manager, CUB might just deserve a fresh look.