Canara Bank - Earnings Growth To Sustain At 15-18%: Motilal Oswal

Motilal Oswal Report

Canara Bank has been reporting a healthy performance, with earnings driven by steady revenue growth and controlled provisions. With a comfortable credit-deposit ratio, it is well positioned to grow its loan book with a continued focus on high-yielding RAM segments, especially, housing finance and vehicle loans.

Management expects net interest margin to remain rangebound as the company remains watchful of potential monetary easing and the associated impact on lending yields, even as a high mix of MCLR loans places the bank in an advantageous position over the medium term.

Asset quality improvement is likely to continue with slippages sustaining at ~1.2%, while recoveries and upgrades continue to outperform slippages, thus keeping credit costs under control.

Canara Bank delivered FY24 return on asset/return on equity of 1.0%/20%. We estimate return ratios to remain steady with RoA improving to 1.1% by FY26E, supported by 12% compound annual growth rate in loan growth. We reiterate our Buy rating on the stock with a revised target price of Rs 140 (premised on 1.2 times FY26E adjusted book value).

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.