BackCanara Bank share price hits fresh 52-week high; is the stock buy-worthy?
Canara Bank share price has been in the green since October 26, up about 34 per cent in the last one year against a 5 per cent gain in Sensex.
PremiumCanara Bank share price rose over 2 per cent to hit their fresh 52-week high of ₹390.55 in intraday trade on BSE on Tuesday, October 31, looking set to extend the gains into the fourth consecutive session. Canara Bank share price today opened at ₹383.25 against the previous close of ₹382.55 and rose a little over 2 per cent to hit its 52-week high on the BSE. Around 11:50 am, the stock was 1.27 per cent up at ₹387.40 on BSE.
Canara Bank share price has been in the green since October 26, the day it announced its September quarter earnings. The stock is up about 34 per cent in the last one year against a 5 per cent gain in the equity benchmark Sensex.
Canara Bank reported a growth of 43 per cent in net profit to ₹3,606 crore, compared to ₹2,525 crore in the corresponding period last year. Its net interest income (NII) – the difference between interest earned and interest paid- in the second quarter of the current fiscal rose 19.8 per cent to ₹8,903 crore, compared to ₹7,433.8 crore in the year-ago period.
The gross non-performing assets (NPAs) declined to 4.76 per cent of total loans in the September quarter over 6.37 per cent in the year-ago period.
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Also Read: Canara Bank Q2 Results: Net profit rises 43% to ₹3,606 crore, NII up 20% YoY; Asset quality improves
Brokerages positive about the stock
After the Q2 results, brokerage firm Motilal Oswal Financial Services maintained its buy call on the stock with a target price of ₹440.
Motilal said Canara Bank reported an in-line performance in Q2FY24, with earnings growing at a steady run rate led by stable revenue and lower provisions. NIMs (net interest margins) compressed 5 bps QoQ (quarter-on-quarter), however, the brokerage firm expects margins to remain broadly stable going forward as MCLR re-pricing offsets the pressure on funding costs.
Motilal Oswal has raised its estimates slightly and expects Canara Bank to deliver FY25 RoA (return on assets) and RoE (return on equity) of 1.1 per cent and 17.6 per cent, respectively.
Another brokerage firm JM Financial also maintained its buy call on the stock and raised the target price to ₹395 from ₹371.
"We expect Canara Bank’s rerating to continue going ahead driven by (a) continued expansion in return profile RoA and RoE being 1 per cent and 18.6 per cent, respectively, by FY25E, (b) stable asset quality with moderate credit costs, and (c) gradual operating leverage kicking in," said the brokerage firm.
Technical views
Some technical analysts remain positive about the stock. However, some of them suggest booking some profit and waiting for a correction to buy the stock.
Gaurav Bissa, VP of InCred Equities pointed out that Canara Bank stock has been in a strong uptrend with consistent formations of higher highs and higher lows on daily charts. The stock has been showing a continuous formation with a breakout from consolidation followed by a fresh consolidation.
"The stock is on the cusp of another swing breakout on daily charts and a close above ₹390 is likely to push the stock towards ₹410-420 levels. It will confirm a bullish MACD crossover on daily charts on a close above ₹390 which will ensure the trend remains strong," said Bissa.
Milan Vaishnav, CMT, MSTA, Founder and Technical Analyst of Gemstone Equity Research and ChartWizard FZE pointed out that Canara Bank has staged a fresh breakout after a corrective retracement from the ₹385 level which found support at 50DMA. 50-DMA presently stands at ₹357 and is the nearest support for the stock in the near term.
"The stock has opened up further room for itself on the upside. If the freshly initiated breakout gets extended, the stock can test ₹398 and ₹405 levels. Investors holding this stock can continue to ride the up-move by trailing their stop loss level to ₹377. Fresh entry can also be made at the current levels by placing the protective stops at ₹377," said Vaishnav.
Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers, however, is of the view that one can consider booking some profit in the stock at the current juncture.
"On a monthly basis, Canara Bank is hovering near its resistance level of ₹400. On the indicator front, the monthly ADX line is way above both the DMIs, which is a sign of exhaustion. As we advance, one can look to book profits near ₹390-400 levels. Fresh longs are not advised as of now," said Patel.
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Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
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