Canara Bank Stock Prices – Shareholding Pattern, Charts & Financial Summary


Stock for the week Canara Bank CMP

Investment Rationale

  • Most of the PSU banks seem to be on the cusp of turnaround after years of rigorous overhaul of processes, systems and practices in place.
  • Canara Bank looks promising among the pack. In FY19, the bank bounced back into black.
  • Stellar Q1FY20 earnings : There was strong improvement in asset quality. Gross NPA was down to 8.80% as at June’19 from 11.08% YoY. Net NPA also improved to 5.35% (Q1FY20) from 6.91% (Q1FY19). Profit came in at Rs. 373 crore in Q1FY20 vis-a-vis Rs.313 crore in Q1FY19.
  • Business back on growth trajectory : Advances grew by 11.12% (YoY) in Q1FY20. In a falling interest rate scenario, we expect NIMs to be stable. Major driver being Retail Credit, which grew at 13.48% (YoY).
  • Pick up in monsoons, the government’s infra push, and slow but steady improvement in the economy is likely to maintain business growth momentum.
  • The board has passed the resolution for raising fresh equity of around Rs. 6,000 crore and unlocking value by disinvesting stake in Can Fin Homes, which at prevailing market price is worth around Rs. 1,400 crore, and will take care of capital needs for business growth.
  • The bank has delivered advances CAGR of 15.57% in the last 15 years, which grew from around Rs. 48,871 crore in 2004 to Rs. 4,28,114 crore by March’19. In the same period, CASA grew at a CAGR of 13.48%, which stands at around Rs. 6 lakh crore as at March’19.
  • Given the visibility, government’s determination and regulator’s approach, we believe Canara Bank is an attractive investment buy.


The bank looks attractively priced. In favourable times it has commanded valuation of 1.5x P/BV on TTM basis. In the last 10 years, the bank was plagued by bad loans which resulted in the stock trading consistently below 1x P/BV, with a mean at 0.93x. We expect the business to grow by a tad over 10% for next two years, while the asset quality improves. Assuming 10% traction in advances, stable margins, 50 bps sequential improvements in gross NPA & net NPA, and operating margin at 30%, we arrive at FY21E book value of Rs. 538 per share. Here, we have not taken into account potential impact of upgradation and/or recoveries of existing NPA or bad loans. Conservatively valuing the bank at 0.9x P/BV at FY21E per share, we arrive at a target price of Rs. 484, implying an upside return of around 118% from the current levels. We recommend to accumulate Canara Bank.


Stock for the week Canara Bank Financial Summary

Stock for the week Canara Bank Income Statement

Stock for the week Canara Bank Balance Sheet


  • The concerted efforts of the bank for improving the asset quality have yielded results, with gross NPA decreasing from 11.08% as at June’18 to 8.80% as at June’19. Net NPA reduced from 6.91% in June’18 to 5.35% in June’19. This marked improvement in asset quality was on the back of significant recoveries and upgradations.
  • The provision coverage ratio (PCR) improved considerably during the quarter from 60.6% in Q1 FY19 to 68.12% in Q1 FY20
  • Slippage has been contained substantially slippage ratio stood at 0.91% in Q1 FY20 vis-à-vis 1.19 in Q1 FY19

Stock for the week Canara Bank Asset Quality

Stock for the week Canara Bank Price to Book Value Band

About the Company

Canara Bank is one of the largest public sector banks owned by the Government of India. It is headquartered in Bengaluru. It was established at Mangalore in 1906, and is one of the oldest public sector banks in the country. The government nationalized the bank in 1969. As of 31 March 2019, the bank had a network of 6,310 branches and more than 8,851 ATMs spread across 4,467 centers.

Stock for the week Canara Bank Disclaimer 1

Stock for the week Canara Bank Disclaimer 2

Stock for the week Canara Bank Disclaimer 3

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Tata Capital Ltd – Preference Shares Issue 2019

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