Neutral Canara Bank with a target of Rs 305: Motilal Oswal Securities

Motilal Oswal Securities has a neutral call on Canara Bank with a target price of Rs 305. The current market price of Canara Bank is Rs 313.35. The time period given by the analyst is a year when Canara Bank price can reach defined target. Motilal Oswal expects slippages to moderate (3.1% of loans), given bulk of the stress has been recognized in the last three quarters, driven by RBI’s Asset Quality Review (AQR) and its second-level impact. We upgrade earnings by ~6% over FY16-19 to factor in higher trading gains. NIMs and better than expected trading gains can provide upside to our estimates. The stock trades at 0.4x FY18E BV and 5.4x FY18E EPS.