Buy Canara Bank; target of Rs 133: Motilal Oswal

Motilal Oswal's research report on Canara Bank

Canara Bank (CBK) reported 1QFY25 standalone PAT of INR39.1b (up 10.5% YoY, in line), driven by lower provisions. NII grew 5.8% YoY to INR91.7b (5% miss). Margin contracted 17bp QoQ to 2.9% hit by a change in the accounting policy, though management maintained its NIM guidance of 2.95% by exit-FY25.On the business front, loan book rose 10.7% YoY/1.6% QoQ to INR9.5t, while deposits grew 12% YoY/1.7% QoQ to INR13.3t. CASA ratio moderated 131bp QoQ to ~31%.GNPA/NNPA ratios improved 9bp/3bp QoQ to 4.14%/1.24%. Fresh slippages moderated slightly to INR30.2b from INR30.8b in 4QFY24. We broadly retain our projections and estimate CBK to deliver an FY26E RoA/RoE of 1.1%/19.3%. Reiterate BUY with a TP of INR133 (premised on 1.1x FY26E ABV).

Outlook

We broadly maintain our earnings and estimate CBK to deliver an FY26E RoA/RoE of 1.1%/19.3%. Reiterate BUY with a TP of INR133 (premised on 1.1x FY26E ABV).