Canara Bank is Rated Buy by MarketsMOJO

Current Rating Overview

On 03 September 2025, Canara Bank's rating was revised from 'Hold' to 'Buy' by MarketsMOJO, accompanied by a significant increase in its Mojo Score from 64 to 78 points. This elevated rating reflects a positive assessment of the bank's overall quality, valuation, financial trend, and technical outlook. The 'Buy' rating indicates that the stock is considered a favourable investment opportunity based on its current fundamentals and market position.

How Canara Bank Looks Today

As of 09 January 2026, Canara Bank continues to demonstrate robust financial health and promising growth prospects. The bank's midcap market capitalisation and position within the public sector banking space provide a solid foundation for sustained performance. Investors should note that all financial data and returns mentioned here are current as of this date, ensuring an accurate reflection of the stock's present condition.

Quality Assessment

Canara Bank's quality grade is rated as 'good', supported by its strong lending practices and asset quality. The latest data shows a Gross Non-Performing Asset (NPA) ratio of 2.35%, which is notably low for a public sector bank, indicating effective risk management and credit appraisal processes. Furthermore, the bank has reported positive results for three consecutive quarters, underscoring operational stability and consistent profitability.

Valuation Metrics

The valuation grade for Canara Bank is classified as 'attractive'. Currently, the stock trades at a Price to Book Value (P/BV) of 1.3, which is reasonable compared to its peers and historical averages. The Return on Assets (ROA) stands at 1.1%, reflecting efficient utilisation of assets to generate profits. Additionally, the Price/Earnings to Growth (PEG) ratio is a low 0.3, suggesting that the stock is undervalued relative to its earnings growth potential. This valuation profile makes Canara Bank an appealing option for investors seeking value in the banking sector.

Financial Trend and Growth

The financial trend for Canara Bank is rated as 'positive', supported by impressive long-term growth figures. The bank has achieved a compound annual growth rate (CAGR) of 61.43% in net profits, signalling strong earnings momentum. Over the past year, the stock has delivered a remarkable 59.01% return, while profits have increased by 21.5%. Operating cash flow for the year reached a high of ₹59,946.57 crores, and the bank declared a dividend per share (DPS) of ₹4.00, the highest in recent years. These indicators highlight the bank's capacity to generate cash and reward shareholders consistently.

Technical Outlook

From a technical perspective, Canara Bank is rated as 'bullish'. The stock has shown positive momentum with a 1-day gain of 1.20% and a 3-month return of 20.69%. Over six months, the stock has appreciated by 33.67%, reflecting strong investor confidence and favourable market sentiment. Despite a slight year-to-date dip of 1.71%, the overall trend remains upward, supported by solid fundamentals and improving financial metrics.

Implications for Investors

The 'Buy' rating assigned to Canara Bank by MarketsMOJO suggests that the stock is well-positioned for further appreciation and offers a compelling investment case. Investors should consider the bank's strong asset quality, attractive valuation, positive financial trajectory, and bullish technical signals when evaluating their portfolio allocation. The combination of these factors indicates that Canara Bank is likely to continue delivering value over the medium to long term.

Sector Context and Market Position

Operating within the public sector banking segment, Canara Bank benefits from government backing and a wide branch network, which supports its lending and deposit mobilisation capabilities. The bank's prudent risk management and focus on quality assets differentiate it from some peers facing higher NPAs. Its midcap status offers growth potential while maintaining relative stability compared to smaller, more volatile entities.

Risk Considerations

While Canara Bank's fundamentals are strong, investors should remain mindful of sector-specific risks such as regulatory changes, interest rate fluctuations, and macroeconomic factors that could impact credit growth and asset quality. Additionally, public sector banks often face challenges related to government policies and competition from private sector banks. Nonetheless, Canara Bank's current financial strength and valuation provide a cushion against these risks.

Summary

In summary, Canara Bank's 'Buy' rating by MarketsMOJO reflects a comprehensive evaluation of its quality, valuation, financial trend, and technical outlook as of 09 January 2026. The bank's strong asset quality, attractive valuation metrics, robust profit growth, and positive market momentum combine to make it a compelling choice for investors seeking exposure to the public sector banking space. The rating update on 03 September 2025 set the stage for this positive outlook, which remains firmly supported by the latest data and market conditions.

Looking Ahead

Investors considering Canara Bank should monitor upcoming quarterly results, asset quality trends, and macroeconomic developments that could influence the bank's trajectory. Maintaining a balanced view of opportunities and risks will be essential to making informed investment decisions in this sector.

Performance Snapshot as of 09 January 2026

Canara Bank's stock returns over various periods illustrate its strong performance: a 1-day gain of 1.20%, a 1-month increase of 4.25%, a 3-month surge of 20.69%, and a 6-month rise of 33.67%. The one-year return stands at an impressive 59.01%, underscoring the stock's resilience and growth potential.

Conclusion

With a Mojo Score of 78 and a 'Buy' grade, Canara Bank presents a well-rounded investment opportunity backed by solid fundamentals and positive market sentiment. Investors seeking exposure to a fundamentally sound public sector bank with attractive valuation and growth prospects may find Canara Bank a suitable addition to their portfolios.

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