IIFL Securities Stock Idea: Buy Canara Bank with Target Rs 124

IIFL Securities recommends buying Canara Bank shares with a target price of Rs 124, representing an upside potential of around 4%. The current market price of the stock is Rs 118.9. The brokerage firm is positive on the stock due to its strong fundamentals, including improving asset quality, healthy credit growth, and cost control measures. Canara Bank is one of the leading public sector banks in India with a strong presence in the retail and corporate segments. The stock has been underperforming recently due to concerns over the impact of the COVID-19 pandemic on the banking sector. However, IIFL Securities believes that the stock is now undervalued and offers a good entry point for investors.

About Canara Bank:

Canara Bank is a major Indian public sector bank headquartered in Bengaluru, Karnataka. Founded in 1906, it is one of the oldest and largest banks in India with a network of over 10,000 branches and ATMs across the country. Canara Bank offers a wide range of financial products and services including retail banking, corporate banking, international banking, and treasury operations. The bank has a strong presence in rural and semi-urban areas, and is known for its focus on financial inclusion and social banking. Canara Bank has a global presence with branches in several countries, including the United Kingdom, the United States, the United Arab Emirates, and Singapore.

52 Week Price Trend:

Canara Bank's current market price (CMP) of Rs 118.9 indicates a significant decline compared to its 52-week high of Rs 598.8. This represents a drop of approximately 80%. The bank's performance has been impacted by factors such as rising bad loans, increasing competition, and economic headwinds. However, the stock's 52-week low of Rs 272.3 suggests that there is potential for recovery. Investors should carefully consider the bank's financial fundamentals, market outlook, and overall risk profile before making any investment decisions.

Stratzy's MOST Analysis:

CANBK has been accorded the highest rating of "AAA" by Stratzy's MOST framework, indicating exceptionally low fundamental risks. This rating is a testament to CANBK's strong management, promising outlook, robust safety, and positive trend. Each of these pillars has been carefully assessed and scored, resulting in an overall AAA rating, which denotes a highly reliable and stable investment choice.

Company's Fundamentals:

Canara Bank (NSE: CANBK) exhibits attractive valuation metrics. Its Stock PE ratio of 7.09 indicates that investors pay ₹7.09 for each rupee of earnings. The Price-to-Book (PB) ratio of 1.33 suggests that the market value of the company is 1.33 times its book value. Furthermore, Canara Bank offers a dividend yield of 2.09%, providing investors with a stream of passive income. These metrics highlight the bank's undervalued status and potential for dividend-driven returns.

Fundamental and Technical information provided in this blog were last updated on 01 Jun, 2024

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