CANBK - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

🧠 How I’m Thinking About This

You’re asking for a full-spectrum fundamental analysis of Canara Bank Ltd (CANBK), a large-cap PSU bank with strong earnings momentum and improving asset quality. I’m evaluating its financial strength, valuation metrics, business model, and technical indicators to determine its long-term investment potential and ideal entry point.

📊 Core Financials Breakdown

Profitability & Growth

EPS: ₹19.7 — solid earnings base

PAT Qtr: ₹4,752 Cr vs ₹5,003 Cr — -5% QoQ, but +21.7% YoY — strong growth trajectory

ROE: 18.2%, ROCE: 6.79% — excellent equity returns, typical capital structure for banks

Debt-to-equity: 15.2 — high, but expected for a lending institution

Dividend & Cash Flow

Dividend Yield: 3.47% — attractive for income-focused investors

Consistent payouts supported by robust net interest income and low credit costs

💰 Valuation Indicators

Metric Value Interpretation

P/E Ratio 5.86 Deeply undervalued vs industry PE of 7.91

P/B Ratio ~1.00 Trading at book value — strong margin of safety

PEG Ratio 0.13 Extremely attractive — valuation well below growth rate

Intrinsic Value ~₹120–₹125 Trading slightly below fair value

Valuation is compelling, especially with a low PEG ratio and strong earnings visibility.

🏦 Business Model & Competitive Edge

Industry: Banking — regulated, cyclical, credit-driven

Moat

Strong CASA ratio and diversified loan book

Government backing ensures stability and access to low-cost capital

Digital transformation and branch network expansion improving operational efficiency

Catalysts

FII holdings up (+0.84%) — rising foreign institutional confidence

Brokerage consensus targets range from ₹120 to ₹143 — upside of 4–24%

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5-year return of 544.3%, with 14.8% quarterly revenue growth and 26.1% profit margin

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Canara Bank is emerging as a high-quality PSU compounder with strong fundamentals and improving investor sentiment.

📉 Technical & Entry Zone

Current Price: ₹115

DMA 50/200: Trading above both — bullish trend

MACD: +1.37 — positive momentum

RSI: 64.4 — neutral to slightly overbought

📌 Suggested Entry Zone: ₹110–₹115

This range offers a solid margin of safety and aligns with technical support and intrinsic value.

🕰️ Long-Term Holding Guidance

Hold if already invested, especially for dividend yield and earnings momentum

Buy on dips near ₹112 if bullish on credit growth and PSU banking reforms

2026 Target Price: ₹129–₹143 based on brokerage consensus and technical outlook

2030 Forecast: ₹180+ if asset quality and profitability continue to improve

⭐ Fundamental Rating

4.5

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trendlyne.com

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stockpricearchive.com

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