Canara Bank stock is near 52-week high. Should You Buy After Q3 Results?

Canara Bank reported strong operating performance with loan growth and improving asset quality, while margin expansion led NII. Domestic brokerage and research firm Motilal Oswal said loan growth was led by corporate, retail and agri segments and the outlook remains encouraging.

“Sliding declined sequentially; Thus the asset quality ratio improved further on the back of higher recoveries and upgrades. The decline in SMA overdues and restructured portfolios provide incremental comfort on asset quality trends. We raise our PAT estimates by 5% for FY23/24 and 4% for FY25 to take into account higher NII and lower provisions. We estimate ROA/ROE of 1.1%/17.5% for FY15,” said the note adding that the brokerage has maintained its buy rating Canara Bank Shares with a revised target price of 410 each.

The bank’s net interest income or NII, which is the difference between interest earned and spent, grew by nearly 24% 8,600 crore during Q3 as against 6,945 crore year-on-year (YoY). Its Net Interest Margin (NIM), a key metric for the bank’s profitability, stood at 3.04% as against 2.83% in the previous quarter.

Loan growth for FY23 is expected to be around 14-15% and margins for FY23 are expected to be ~3.0%. Management remained confident of maintaining credit cost at ~1.2%. The brokerage reported that the bank is willing to deliver an ROA of 1% by next year.

The views and recommendations given above are those of individual analysts or broking companies and not of Mint.