Buy Canara Bank; target of Rs 600: Motilal Oswal

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26 Aug, 2025 12:21

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Motilal Oswal is bullish on Canara Bank and has recommended buy rating on the stock with a target of Rs 600 in its February 11, 2013 research report.
 
“Canara Bank's 3QFY13 PAT of ~INR7.1b (-19percent YoY and +7percent QoQ) was 6percent above our estimate of INR6.7b. Higher non-interest income (27percent above estimate) compensated for higher than expected provisions and tax rate. NII was 3percent below estimate (+4percent YoY and +2percent QoQ to INR19.9b) led by lower-than-expected loan growth (flat both QoQ and YoY). NIMs calculated improved 4bp QoQ to 2.27percent (inline est).”
 
“Net slippages remained high at INR11b v/s INR12.8b in 2QFY13. GNPAs/NNPAs grew 9percent/12percent QoQ and PCR, including write-offs stood at 61percent. CBK restructured loan of INR8.7b during the quarter. However, repayment of INR12.5b, took cumulative restructured loans (facility-wise) to INR145b v/s INR149b a quarter ago. OSRL stood at INR134b (6.1percent of loans facility-wise). Non core income (forex + trading + recoveries + MTM on investment) stood at INR4.2b (v/s INR3.3b) in 3QFY13 and INR9.3b (v/s INR8b) in 9MFY13. CASA deposits grew 8percent YoY (down 3percent QoQ) led by 8percent YoY growth in SA deposits (down 3percent QoQ). CASA ratio improved marginally to 25percent.”
 
“CBK has aggressively built up investment portfolio, leading to higher share of trading (including AFS gains) in the profitability. With expected revival of growth from FY14 onwards, asset reallocation will be positive for margins, further, benefit on cost of funds (due to fall in above card rate deposits) will aid margin improvement in FY14. RoA and RoE will be healthy at 0.8percent/16percent over FY14-15E. Maintain Buy,” says Motilal Oswal research report.

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