Buy Canara Bank; target of Rs 440: Magnum

Magnum is bullish on Canara Bank and has recommended buy rating on the stock with a target of Rs 440 in its August 07, 2012 research report.

“Canara Bank’s total income for Q1FY13 increased by 18.9% to reach Rs 9,165 crore, including Rs 6,229 crore income from loans/advances, which grew by 13.6% yoy basis. Non-interest income of the Bank increased to Rs 693 crore, with growth of 25.7%. Net Interest Margin (NIM) was 2.40% as at June 2012 compared to 2.39% a year ago. Operating Profit for the quarter stood at Rs 1,394 crore. Net Profit for the Q1FY13 stood at Rs 775 crore compared to Rs 726 crore Q1FY12. Net Interest Margin stood at 2.40. The total restructured amount in the current quarter is to the tune of Rs 6,010 crore out of which Rs 5,500 crore belongs to SEB. Bank has already recovered Rs 100 crore out of whatever is slipped in this quarter. Management is confident to achieve 2.7%-2.8% margins by the year end (FY2013).”

“Canara Bank is currently trading at a par valuation amongst the Banking space. The fresh slippages in the current quarter is to the tune of Rs 1500 crore, a stress was mainly seen in MSME segment. Management expects that no major slippages more than Rs 1000 cr and Bank do not expect any large case to come in forthcoming quarter. The deal pipeline is very small and very less. At CMP of Rs 360, it is trading at an adjusted P/BV of 0.7x FY13E BV of Rs 513. We have valued the Bank at P/BV of 0.85x FY13E & maintain our BUY rating on the stock with a target price of Rs 440.00 (earlier target of Rs 460) with an upside potential of 20% from current levels.”

“Canara Bank is currently trading at a par valuation amongst the Banking space. Canara Bank is planning to reprise its cost of Deposits in the coming quarters. The problem faced by the Bank is the current account (CASA). The fresh slippages in the current quarter is to the tune of Rs 1500 crore, a stress was mainly seen in MSME segment. Management expects that no major slippages more than Rs 1000 cr and Bank do not expect any large case to come in forthcoming quarter. The deal pipeline is very small and very less. At CMP of Rs 360, it is trading at an adjusted P/BV of 0.7x FY13E BV of Rs 513. We have valued the Bank at P/BV of 0.85x FY13E & maintain our BUY rating on the stock with a target price of Rs 440.00 (earlier target of Rs 460) with an upside potential of 20% from current levels,” says Magnum research report. 

Non-Institutions holding more than 90% in Indian cos

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