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Business News/ Markets / Stock Markets/  Rekha Jhunjhunwala portfolio: Why is this 300 bank stock nosediving?
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Rekha Jhunjhunwala portfolio: Why is this ₹300 bank stock nosediving?

This Rekha Jhunjhunwala-backed bank has reported marginal improvement in NIM growth whereas its peers have shown significant growth in NIM, say experts.

This Rakesh Jhunjhunwala portfolio stock has support placed at ₹285, say experts. (AFP)Premium
This Rakesh Jhunjhunwala portfolio stock has support placed at 285, say experts. (AFP)

Rekha Jhunjhunwala portfolio: After climbing to 52-week high in November 2022, Canara Bank shares have been in base building mode since then. This near 300 apiece banking stock has shed near 11 per cent in YTD. In the week gone by, this Rekha Jhunjhunwala portfolio stock has lost over 5.50 per cent. However, this banking stock still managed to rise over 50 per cent in last one, which is much enough to attract positional investor, looking for the bottom fishing opportunity.

According to stock market experts, Canara Bank has reported improved NIM in Q4 results but this is not enough to attract buyers as other banks have reported much better NIMs. They said that correction was awaited in this Rekha Jhunjhunwala portfolio stock as it was trading at higher valuations compared to its peers. They advised investors to wait for more correction and buy close to its current support levels.

Canara Bank Q4 results

Speaking on why Canara Bank share price is nosediving, Vaibhav Vidwani, Research Analyst at Bonanza Portfolio Ltd said, "Higher growth in the riskier asset may have negatively impact in Canara Bank's asset quality going ahead. Also, Canara Bank has reported marginal improvement in NIM growth from 2.93 per cent in Q3FY23 to 2.95 per cent in Q4FY23, whereas its peers have shown significant growth in NIM. As a result of above mentioned factors, investors have not showing much interest in Canara Bank shares. Another reason for this fall may be that the stock price of Canara Bank has given 3.0 times price movement in the last 3-years leading to higher valuation compared with peers."

The Bonanza portfolio expert went on to add that Canara Bank has shown high growth in most of risky advances, in agriculture loan, it has shown a growth of 21 per cent YoY while Corporate and other loans grew by 20.60 per cent YoY. Agriculture loan has GNPA of 3.4 per cent whereas Corporate loan has GNPA of 6.44 per cent.

Speaking on Canara Bank performance in FY23, Vaibhav Vidwani of Bonanza Portfolio said, "In FY23, Canara Bank have shown 19.14% growth in Net interest income at 31435.29 crore with net profit has given 86.76 per cent YoY growth at 10604 crore. Canara Bank’s asset quality has improved as gross nonperforming assets (GNPA) ratio reduced to 5.31 per cent in the FY23, down from 5.89 per cent at the end of FY22. In the past two years, the lender has seen a sharp improvement in asset quality with NPAs falling from a whopping 7.5 per cent in FY18 to 1.73 per cent in FY23. The PSU bank has shown 18 per cent growth in advances in FY23 but it has only given 8.5 per cent growth in deposits."

Canara Bank share price target

Advising positional investors to wait for more correction, Vaishali Parekh, Vice President — Technical Research at Prabhudas Lilladher said, "Canara Bank share has corrected to some extent with profit booking witnessed after it found resistance near 326 zone and has the near-term support level near 285 where it can sustain and halt the slide. The RSI has shown exhaustion near the peak zone of 326 attaining the overbought zone and has slipped down, which is now currently well placed. One can watch for the level of 285 as support zone and wait for a revival. The near-term target would be then 320 to 325 levels."

Rekha Jhunjhunwala shareholding

According to shareholding pattern of Canara Bank for January to March 2023 quarter, Rekha Jhunjhunwala holds 3,75,97,600 Canara Bank shares, which is 2.07 per cent of total paid up capital of the state-owned bank.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Asit Manohar
Chief Content Producer at Live Mint Digital Team
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Published: 13 May 2023, 10:54 AM IST
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