Buy Canara Bank, target price Rs 210: LKP Securities

LKP Securities has buy call on Canara Bank with a target price of Rs 210. The current market price of Canara Bank is Rs 164.

Canara Bank, incorporated in the year 1906, is a banking company (having a market cap of Rs 26652.46 Crore).

Financials
For the quarter ended 31-12-2020, the company reported a Consolidated Total Income of Rs 24490.63 Crore, up 7.98 % from last quarter Total Income of Rs 22681.05 Crore and up 57.68 % from last year same quarter Total Income of Rs 15531.80 Crore. The bank reported net profit after tax of Rs 749.73 Crore in latest quarter.


Investment Rationale
Factoring near term capital infusion, the brokerage expects the bank’s loan book to fatten cautiously at CAGR of 8% over FY21-23E, led by retail book growth. The bank’s credit cost will normalise by FY22E and estimate return ratio ROA/ROE of 0.3% and 7% in FY23E. It values the standalone entity at 0.6xFY22E BVPS (Rs 349) and arrive at a target price of Rs 210. It recommends BUY with a potential upside of 31%.

Promoter/FII Holdings
Promoters held 69.3 per cent stake in the company as of Dec 30, 2020, while FIIs held 4.4 per cent, DIIs 10.8 per cent and public and others 15.2 per cent.