Canara Bank reported a healthy quarter with strong other income (higher treasury and PSLC gains) and low credit costs (70 bps NPA provisions) aiding RoA of 1.14%.
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Dolat Capital Report
Canara Bank's limited standard provision buffers and modest core profitability metrics limit valuations for us, though low delinquencies and improved provision coverage ratio provide comfort.
Net interest margin at 2.7% (FY26E) is at the lower end of the industry, and earnings are modest with RoA at 0.9-1%, with high dependence on treasury gains and recoveries from WO book to drive PAT.
Once the benefits of recoveries on P&L (both from GNPA and written-off pool) start fading, it may impact the bank's earnings profile.
We value the bank at 1x FY27E ABV, with a target price of Rs 125.
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