Buy Canara Bank, target price Rs 282: Emkay Global

Emkay Global has buy call on Canara Bank with a target price of Rs 282. The current market price of Canara Bank is Rs 205.25. Time period given by analyst is one year when Canara Bank price can reach defined target.

Canara Bank, incorporated in the year 1906, is a banking company (having a market cap of Rs 37235.02 Crore).

Canara Bank key Products/Revenue Segments include Interest & Discount on Advances & Bills, Income From Investment, Interest On Balances with RBI and Other Inter-Bank Funds and Interest for the year ending 31-Mar-2021.



Financials
For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 24518.42 Crore, up 7.33 % from last quarter Total Income of Rs 22843.51 Crore and up 3.13 % from last year same quarter Total Income of Rs 23774.15 Crore. The bank reported net profit after tax of Rs 1918.80 Crore in latest quarter.

Investment Rationale
The brokerage expects a gradual improvement in RoA/RoE to 0.6-0.7%/12- 15% over FY23-25E from 0.5%/11% in FY22, led by better growth and lower LLP. It retains Buy with a revised TP of Rs282 (from Rs290) based on (0.8x FY24 ABV) and subs investment of Rs23. CET 1 remains lower at 10.3% and thus the bank may look at raising capital via QIP/bonds, instead of any stake sale in subsidiaries at this point. Key risks to call/estimates: Higher-than-expected NPA formation, a slower growth trajectory, and a sharp rise in G-Sec yields leading to lower treasury gains.

Promoter/FII Holdings
Promoters held 62.93 per cent stake in the company as of 31-Dec-2021, while FIIs owned 7.62 per cent, DIIs 13.83 per cent.