NPAs Decline, NII Jumps By 19%, Canara Bank’s Share Price Hits 52-Week High; Read If It’s Worth Buying

Canara Bank share price on Tuesday jumped over 2 percent and hit their fresh 52-week high of Rs 390.55 on Bombay Stock Exchange (BSE) in intraday trade. The share price of the public sector bank opened at Rs 383.25. It pervious close was Rs 382.55.

Looking into the Canara Bank share price performance of the day so far, it was 1.27 per cent up at Rs 387.40 on BSE at 11:50 AM. However, the stock has been a green sign since the day the bank announced its September quarter earnings: October 26. In the past year, the stock is up about 34 per cent against a 5 per cent gain in the equity benchmark Sensex.

As compared to last year when the bank reported net profit to Rs 2,525 crore during corresponding period, Canara Bank this year registered a growth of 43 per cent to Rs 3,606 crore. The net interest income (NII) of the second quarter of current fiscal jumped by 19.8 per cent to Rs 8,903 crore, which was Rs 7,433.8 crore in the year-ago period.

In a good news, the bank’s gross non-performing assets (NPAs) have also declined. As of now, the NPAs stand at 4.76 per cent of total loans in the September quarter over 6.37 per cent in the year-ago period.

Following the Q2 results, brokerage company Motilal Oswal Financial Services has retained its recommendation to buy the stock and set a target price of ₹440. They noted that Canara Bank’s Q2FY24 performance was in line with expectations, with earnings steadily increasing due to stable revenue and reduced provisions.

Although net interest margins (NIMs) decreased slightly on a quarter-on-quarter basis, Motilal anticipates that margins will stay relatively stable in the future, thanks to MCLR re-pricing offsetting funding cost pressures. They have slightly adjusted their estimates and anticipate Canara Bank to achieve a 1.1% return on assets (RoA) and a 17.6% return on equity (RoE) for FY25.

Additionally, JM Financial, another brokerage firm, has maintained its buy recommendation for the stock and raised the target price to ₹395 from ₹371. From a technical perspective, some analysts are optimistic about Canara Bank’s stock. However, some of them suggest taking profits and waiting for a correction before buying the stock.

Gaurav Bissa, VP of InCred Equities, highlighted the stock’s strong upward trend with consistent higher highs and higher lows on daily charts.

He noted that the stock has been continuously forming and experiencing a breakout from consolidation, followed by a fresh consolidation.