Canara Bank share price target

Canara Bank Q1FY18 results comment NII rose to Rs. 2713.24 Cr in Q1FY18 compared to Rs. 2708.22 Cr in Q4FY17.

The Government of India is mulling consolidation in the public sector banking space and Canara Bank is expected to one of the anchor bank/acquiring bank. This creates very high level of uncertainty for its future earning trajectory as balance sheet quality of several smaller public sector banks is considered to be pathetic. Further, we expect the Bank will continue to witness elevated level of credit cost, which will keep its earnings and return ratios subdued over next 6-8 quarters. We have cut our PAT and adjusted book value estimates for FY19E by 21.2% and 9.1%, respectively due to sharp QoQ rise in net NPA (+12.2% QoQ) and rise in credit cost guidance. We reiterate our HOLD recommendation on the stock with a downwardly revised...

NII rose to Rs. 2708.22 Cr in Q4FY17 compared to Rs. 2413.8 Cr in Q3FY17.

Canara Bank (CBK) reported a weak set of numbers (Q4 PAT of Rs 2.1 bn, down 33% QoQ) despite ~Rs 7 bn profit from stake sale in CanFin Homes (high trading profits at Rs 11.3 bn).

Following an impressive 45% upsurge in last 4 months, we believe that the current stock price has incorporated most of the near-term positives. Further, we expect the Bank will continue to witness elevated level of credit cost, which will keep its earnings and return ratios subdued over next 3-6 quarters. Rolling over our estimates to FY19E, we change our recommendation on the stock to HOLD from BUY with an upwardly revised Target Price of Rs384 (from Rs360...

Can Fin Homes Ltd (Can Fin) is a south based (74% of business) housing finance company with 43.53% shareholdings owned by Canara Bank. Can Fin has maintained a low-risk profile loan book, predominantly focused on salaried class. We expect Can Fin to deliver RoE of more than 20% on a sustained basis from FY2017 onwards (FY2017-23.6%, FY201..

NII fell to Rs. 2413.8 Cr in Q3FY17 compared to Rs. 2442.35 Cr in Q2FY17. NII rose by 8.41% ( Rs. 187.2 Cr ) when compared with the same period last year.

Despite tough scenario, Canara Bank has delivered an inspiring performance on key asset quality parameters in 3QFY17. Slippages dipped to Rs22.3bn in 3QFY17 vs. Rs24.5bn & Rs38.8bn in 2QFY17 & in 1QFY17, respectively. Total gross NPAs and standard restructured loan declined to 13.6% of loan vs. 13.9% in 1QFY17. Further, its PCR improved to 52.5% in 3QFY17 from 50.8% in 1QFY17. However, its operating profit dipped by 7.4% qoq to Rs19.8bn, while PAT declined by 9.8% qoq to Rs3.2bn. Subdued performing on operating front is attributable to reversal of Rs2bn of interest income on SDR loans due to change in income recognition guidelines by the RBI. As...

Credit growth for Canara Bank remained muted with flat negative growth of -0.9% yoy and -1.1% QoQ. Loan book was flattish due to a decline in corporate advances. The bank has also converted Rs 9000 crore of Discom loans to bonds during last two quarters leading to decline in infrastructure loan book. Retail advances backed by strong growth across sub-segments grew 34% YoY. On advances front, the bank is strongly focusing on growing retail advances (Agriculture, MSMEs, Housing & Other Retail Schemes)...

Given that the bank's performance on NII, asset quality and other income front is ahead of our FY17E forecasts; our forecasts have seen upward revisions. We are getting reasonably assured that bank will continue to deliver positive surprise on operating as well as assets quality front in coming quarter under the new board and management team. Hence, we have upgraded the stock to BUY from earlier HOLD rating with...