Buy Canara Bank; target of Rs 276 LKP Research

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26 Aug, 2025 12:21

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LKP Research's research report on Canara Bank

Canara Bank has been reporting consistent growth in net profit since last seven quarters. A bulky provision (Rs54bn) made in 4QFY20, continued to safeguard the balance sheet with PCR (calculated) of 65% and PCR (including TWO) of 83%. The banks margin (2.8% in the 3QFY22) is in upward trajectory with continuous improvement in CD ratio. On the business front, the bank has been reporting stable credit growth (7% sequential jump seen in previous quarter) across segments. The banks recoveries are in line with the guidance and we expect the credit cost to be below 2% for FY22 and FY23. Moreover, the bank has raised capital in FY21 which resulted in the CET -1 of 10.1% (at par); thus we believe the bank may raise capital from stake sales of AMC, HFC and Insurance.

Outlook

We believe the hurdles from merger (with Syndicate Bank) are behind and the bank shall witness gradual improvement in profitability. Given the FY23E ROA/ROE of 1%/17% inexpensive valuation (0.6x PBVPS) we recommend BUY.

More Info

At 16:01 hrs Canara Bank was quoting at Rs 209.25, up Rs 8.40, or 4.18 percent.

It has touched an intraday high of Rs 210.55 and an intraday low of Rs 199.40.

It was trading with volumes of 1,313,189 shares, compared to its thirty day average of 935,370 shares, an increase of 40.39 percent.

In the previous trading session, the share closed down 4.38 percent or Rs 9.20 at Rs 200.85.

The share touched its 52-week high Rs 272.80 and 52-week low Rs 124.35 on 03 February, 2022 and 19 April, 2021, respectively.

Currently, it is trading 23.3 percent below its 52-week high and 68.28 percent above its 52-week low.

Market capitalisation stands at Rs 37,960.68 crore.

For all recommendations report, click here

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