Canara Bank share price target

Canara bank reported better than expected NII and PPoP growth of 29% and 32% YoY respectively on an amalgamated basis, driven by improved spreads, healthy growth in fee income, elevated treasury gains, and high recoveries from w/off accounts. Collection efficiency stood at 92-95% for the month of Sep, including past arrears. Management estimates ~Rs130bn or 2% of loans to be...

Sub-par core earnings (PPoP/assets at 1.5%), elevated credit costs, and focus on merger could continue to pressurize earnings over the medium term. We have a REDUCE recommendation on the stock with...

Canara Bank (CBK) reported a Rs 32.6bn loss as the bank consciously made higher wage and NPA-related provisions due to amalgamation.

supported by Insulin Glargine and good traction in biologics. Disclaimer: This Research Report is for the personal information of the authorized recipient and doesn't construe to be any investment, legal or taxation advice to the investor. It is only for private circulation and use. The Research Report is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. No action is solicited on the basis of the contents of this Research Report. The Research Report should not be reproduced or redistributed to any other person(s)in any form without prior written permission of the SMC. The contents of this material are general and are neither comprehensive nor inclusive. Neither SMC nor any of its affiliates, associates, representatives, directors or employees shall be responsible for any loss or damage that may arise to any person due to any action taken on the basis of this Research Report. It does not constitute personal recommendations or take into account the particular investment objectives, financial situations or needs of an individual client or a corporate/s or any entity/s. All investments involve risk and past performance doesn't guarantee future results. The value of, and income from investments may vary because of the changes in the macro and micro factors given at a certain period of time. The person should use his/her own judgment while taking investment decisions. Please note that SMC its affiliates, Research Analyst, officers, directors, and employees, including persons involved in the preparation or issuance if this Research Report: (a) from time to time, may have long or short positions in, and buy or sell the securities thereof, of the subject company(ies) mentioned here in; or (b) be engaged in any other transaction involving such securities and earn...

Bank expects Global NIM to reach 2.75% (currently 2.65%) going forward & aims at improving the bottom-line further with balanced thrust on both retail and corporate advances coupled with increased adoption of digitalization for efficiency improvement. Bank intends to continue with the growth in the retail advances while simultaneously focusing on improvement in corporate book with high rated corporate advances. Moreover, management is highly confident...

Persistent Systems (PSYS) reported below-par Q3FY19 revenues but a beat on margins. Digital business returned to growth after two quarters of QoQ decline. Despite onsite constraints, PSYS benefited from higher billing rates and a better offshore mix, which fueled EBITDA margins (+250bps QoQ). We upgrade the stock from REDUCE to ADD on attractive valuations post a 30% price correction since we initiated coverage in Jul'18. Baking in higher margins,...

Canara Bank reported NII of INR 32.8bn (-15% q-o-q & 18% y-o-y) largely due to one-off lumpy interest recovery of INR 5.2bn from resolution of Bhushan steel in Q1 FY19. Net total Income stood at INR 48.3bn (-15% q-o-q & 2% y-o-y) largely due to lower other income of INR 15.55bn (-15% q-o-q & -20% y-o-y). Elevated provision of INR 28.4bn (10% q-o-q & 31% y-o-y) and a tax write back of INR 8.1bn resulted positive PAT of INR 3bn (6% q-o-q & 15% y-o-y). Loan book for the quarter stood...

NII rose to Rs. 3882.9 Cr in Q1FY19 compared to Rs. 2987.59 Cr in Q4FY18. Canara Bank Q1FY19 results Comment

ff The Management expects quarterly fresh slippages run rate to moderate to ~Rs20bn in remaining quarters of FY19. Maintaining its fresh slippage guidance of Rs100bn for full FY19, the Bank expects recovery to the tune of Rs160bn (vs. Rs42bn in 1QFY19). Thus, it expects...

ff The Management expects quarterly fresh slippages run rate to moderate to ~Rs20bn in remaining quarters of FY19. Maintaining its fresh slippage guidance of Rs100bn for full FY19, the Bank expects recovery to the tune of Rs160bn (vs. Rs42bn in 1QFY19). Thus, it expects...

ff The Management clarified that the Bank (a) has not availed RBI's dispensation of spreading MTM loss over next 4 quarters; (b) continues to provide 50% on secured exposure towards accounts referred to NCLT vs. 40% permitted by the RBI; (c) has fully provided for incremental...

NII fell to Rs. 2987.59 Cr in Q4FY18 compared to Rs. 3679.13 Cr in Q3FY18. Canara Bank Q4FY18 results Comment

Canara bank reported higher NII of INR 36.8bn (52% y-o-y & 32% q-o-q) as there was a onetime income on interest on income tax refund of INR 7.4bn. Net total Income of INR 52.4bn (25% y-o-y & 11% q-o-q) & total opex of INR 24.1bn (9% y-o-y & 8% q-o-q) resulted in lower cost to income ratio of ~46% (-686bps y-o-y & -143 q-o-q). Elevated provisions of INR 26.7bn (80% y-o-y & 24% q-o-q) resulted in lower PAT of INR 1.25bn (-61% y-o-y & -52% q-o-q). Loan book stood at INR 3.73tn (13% y-o-y & 4% q-o-q) for the quarter. GNPA in absolute terms remained stable at INR 403bn (3% q-o-q) as both...

Canara Bank (CBK) reported decent Q3FY18 driven by pick-up in advances (up ~13% YoY), uptick in NIM (up 5 bps QoQ to 2.39%) and improvement in headline asset quality (GNPLs at 10.4%; down 13 bps QoQ).

Credit Cost to Remain Elevated in the Medium-term; Maintain HOLD Canara Bank has reported a higher-than-expected bottom-line growth in 3QFY18 led by onetime interest income from IT refund (Rs7.4bn) and higher cash recovery of Rs15.3bn vs. Rs10.2bn in 3QFY17. As a result, its net profit stood at Rs1.3bn (-60.9% YoY & -51.7% QoQ) vs. our estimates of Rs4.2bn net loss. However, from asset quality perspective, the Bank demonstrated sustained improvement with fresh slippages declining to the lowest level of Rs26.4bn in last one year. Further, its impaired loan portion also declined to 12.2% in Dec'17 from 12.7% and 13.6% in 2QFY18 and 3QFY17, respectively. Loan book grew by 4.1% QoQ and 12.5% YoY to Rs3,731bn during the quarter. As the Bank consciously slowed down deposit growth to 1.5% QoQ and -1.3% YoY; its...

Canara bank reported better NIMs at 2.60% (25bps y-o-y & 4bps q-o-q) led by improvement in C/D ratio 72.2% (462bps y-o-y & 161bps q-o-q). Non-interest income grew 9% y-o-y & -8% q-o-q led by recovery in w/off a/c's to INR19.3bn. GNPA in absolute terms grew marginally (4% q-o-q) led by reduction in slippages (39% q-o-q) and higher recoveries (55% q-o-q). Controlled opex (8% y-o-y) resulted in higher PPOP (16% y-o-y). However, elevated provisions (36% y-o-y) resulted in lower PAT of 2.6mn (-27% y-o-y)....

Canara Bank (CBK) reported a decent Q2, driven by pick-up in advances (up 10% YoY), stable NIM (2.34%; flat QoQ) and headline asset quality (GNPLs at 10.5%; down 5 bps QoQ) and 56 bps QoQ improvement in CASA deposits to 31.2% leading to in-line PAT of Rs 2.6 bn (down 27% YoY).

Elevated Credit Cost Continue to Impede Performance Canara Bank has delivered a healthy operating performance in 2QFY18. Its operating profit surged by 15.8% YoY and 0.3% QoQ to Rs24.8bn led by strong growth in NII (14.1% YoY & 2.6% QoQ to Rs27.8bn) and relatively lower opex (7.5% YoY and -4.7% QoQ) of Rs22.4bn. However, provisioning expenses remained at elevated level of Rs21.6bn (36% YoY & -2.1% QoQ) due to higher stressed assets in balance sheet. Resultantly, the Bank's net profit declined by 27.1% YoY (+3.4% QoQ) to Rs2.6bn. On the other hand, loan book improved by 9.5% YoY and 4.5% QoQ led...

Loan growth picked up marginally to 9.5% YoY, driven by 21.7% YoY growth in retail, while deposits growth was relatively muted at 2.5% YoY, leading to the CD ratio increasing to 72.2% (67.5%/71.7% in 2QFY17/1QFY18). Gross slippages declined sharply (40% QoQ) to INR33.7b, driven by controlled slippages in agri/MSME (INR3b/8b). Absolute GNPA increased 4% QoQ to INR392b, while GNPA/NNPA stood at 10.51%/7.02% (-5bp/-7bp QoQ). Total stressed book stood at 13.4% of advances (13.8% in 1Q). Other highlights: (a) The bank is in discussions to raise total capital of INR63b...

Canara Bank (CBK)'s Q1FY18 PAT grew by 10% YoY at Rs 2.5 bn aided by 18% YoY growth in NII. Provisions continue to stay elevated, though it declined by 19% QoQ, and remains a concern. Headline GNPA ratio increased by 93 bps QoQ to 10.6%, as slippages rose sharply to Rs 55.1 bn (vs. Rs 31 bn in Q4 ..