BackRakesh Jhunjhunwala portfolio: Brokerages bullish on this PSU stock post Q2 results
Emkay has retained its Buy rating on the stock and raised target price, factoring in better return ratios
PremiumState-run Canara Bank on Tuesday reported a significant jump in its standalone net profit at ₹1,333 crore in the quarter ended September, aided by lower bad loan provisioning, rise in non-interest income, and recovery from DHFL resolution. The lender had reported ₹444 crore profit in the year-ago quarter.
“Despite moderate credit growth of 6% YoY and soft NIMs (Net interest margin), Canara Bank reported a strong beat on PAT versus our estimate, mainly helped by higher treasury income, contained provisions and cash recovery from DHFL," said Emkay in a note.
The brokerage has retained its ‘Buy’ rating with a revised target price of ₹230 (from ₹185 earlier), factoring in better return ratios. Though, it sees higher-than-expected NPA formation, a slower growth trajectory, and a sharp rise in G-Sec yields leading to lower treasury gains as key risks to its call/estimates.
Another brokerage Motilal Oswal also has a Buy recommendation on the PSU bank stock as it said that Canara Bank reported healthy earnings for 2QFY22, supported by higher treasury gains and recovery from the DHFL resolution. It has a target price of ₹270 per share.
The lender's asset quality was largely stable despite higher slippages (SREI Infra) and was supported by higher recoveries and upgrades. Also, the bank’s restructured portfolio remained stable on a sequential basis at 2.9% of loans, while SMA overdue declined to around 2% of loans from 3% in the previous quarter.
“We expect CBK’s slippages to moderate as the corporate NPL cycle turns, driving a sustained reduction in its credit costs," Motilal Oswal added.
As per Canara Bank's shareholding data on the BSE, Rakesh Jhunjhunwala holds 1.60% stake or 2,90,97,400 shares as of September 2021. He did not hold any stake in the PSU in the June quarter.
Shares of Canara Bank were trading nearly 4% higher at ₹200 apiece on the BSE in Wednesday's early deals.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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