Monthly call
Canara Bank
Current Market price: 257
Target 1: 291
Target 2: 308
Canara Bank is the second largest PSU bank after SBI with a business size of Rs 240,886 crore. It has a network of 2,400 branches. The bank has recorded strong and consistent growth over the past five years, with RoE in the 16-17% range. It has also maintained rapid loan growth, which has traditionally been above industry average. After SBI, it is among those best positioned to participate in relatively large capex-related funding.
Past Performance:- It reported 2.9% net interest margin (NIM) for FY07, a slight dip from 3.01% for FY06. Its FY07 loan book grew 24% y-o-y to Rs 98,505 crore and deposits grew 22% y-o-y to Rs 142,381 crore.
Future expectations:-
I expect advances to grow 20-22% in FY08 with margins expected to be maintained. FY07 PAT jumped 5.7% to Rs 1,420 crore from Rs 1,382 crore. At the current price of Rs 257.55, the stock trades at attractive pricing.
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