Reduce Canara Bank; target of Rs 95: Dolat Capital Market

Dolat Capital Market's research report on Canara Bank

Canara bank reported better than expected NII and PPoP growth of 29% and 32% YoY respectively on an amalgamated basis, driven by improved spreads, healthy growth in fee income, elevated treasury gains, and high recoveries from w/off accounts. Collection efficiency stood at 92-95% for the month of Sep, including past arrears. Management estimates ~Rs130bn or 2% of loans to be restructured, having received requests for Rs6bn so far. 80% of these are from corporate segment.

Outlook

Moderating our credit cost estimates marginally, we roll over our estimates to Sep-22E, valuing the bank at a 0.4x Sep-22E with a revised TP of Rs 95. Post the sharp correction in stock price, we revise our rating recommendation to REDUCE from SELL.

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