Canara Bank is Rated Buy by MarketsMOJO

Current Rating and Its Significance

MarketsMOJO currently assigns Canara Bank a 'Buy' rating, supported by a Mojo Score of 75.0. This rating indicates a favourable outlook for the stock, suggesting that investors may consider adding or holding the stock in their portfolios. The 'Buy' grade reflects a combination of strong fundamentals, reasonable valuation, positive financial trends, and bullish technical indicators. It is important to note that while the rating was updated in early September 2025, all data and performance figures referenced here are as of 20 January 2026, ensuring an up-to-date perspective.

Quality Assessment

As of 20 January 2026, Canara Bank demonstrates solid quality metrics. The bank maintains a low Gross Non-Performing Assets (NPA) ratio of 2.35%, signalling prudent lending practices and effective risk management. This low level of NPAs is a key indicator of asset quality and operational discipline within the bank. Furthermore, the company has reported positive results for three consecutive quarters, underscoring consistent operational performance. The bank’s Return on Assets (ROA) stands at 1.1%, reflecting efficient utilisation of its asset base to generate profits. These quality parameters contribute significantly to the 'Buy' rating, reassuring investors about the bank’s financial health and stability.

Valuation Perspective

Currently, Canara Bank is trading at a Price to Book (P/B) ratio of 1.3, which is considered fair relative to its peers and historical valuations. This valuation suggests that the stock is reasonably priced, neither excessively expensive nor undervalued. The Price/Earnings to Growth (PEG) ratio of 0.4 further indicates that the stock’s price growth is favourable compared to its earnings growth, making it attractive from a valuation standpoint. Over the past year, the stock has delivered a robust return of 53.76%, outperforming many peers in the public sector banking space. This combination of fair valuation and strong returns supports the current 'Buy' recommendation.

Financial Trend and Growth

The latest data shows a remarkable financial trend for Canara Bank. The company has achieved a compound annual growth rate (CAGR) of 61.43% in net profits, highlighting strong and sustained profitability growth. Operating cash flow for the year has reached an impressive ₹59,946.57 crore, indicating healthy cash generation capabilities. Additionally, the bank has declared a dividend per share (DPS) of ₹4.00, the highest in recent years, reflecting confidence in its earnings and commitment to shareholder returns. These positive financial trends reinforce the stock’s appeal and justify the 'Buy' rating.

Technical Outlook

From a technical perspective, Canara Bank exhibits a bullish trend. The stock has shown consistent upward momentum over multiple time frames, including a 3-month gain of 21.83% and a 6-month increase of 35.88%. The year-to-date (YTD) return currently stands at 0.36%, indicating steady performance despite short-term market fluctuations. The recent one-day decline of 0.92% is minor and does not detract from the overall positive technical setup. This bullish technical grade complements the fundamental strengths, providing a well-rounded basis for the 'Buy' rating.

Summary for Investors

For investors, the 'Buy' rating on Canara Bank signals a favourable opportunity to consider the stock for portfolio inclusion. The bank’s strong asset quality, fair valuation, robust financial growth, and positive technical indicators collectively suggest that it is well-positioned for continued performance. While all investments carry risks, the current data as of 20 January 2026 supports confidence in Canara Bank’s prospects within the public sector banking sector.

Context within the Public Sector Banking Sector

Within the public sector banking sector, Canara Bank’s performance stands out due to its strong fundamentals and growth trajectory. The bank’s midcap market capitalisation places it in a competitive position among peers, with a focus on sustainable lending and profitability. Its Gross NPA ratio of 2.35% is notably lower than many sector counterparts, which often face higher asset quality challenges. This relative strength enhances investor confidence and supports the current positive rating.

Recent Stock Performance and Market Sentiment

As of 20 January 2026, Canara Bank’s stock has demonstrated resilience and growth. The one-month return of 4.64% and three-month return of 21.83% reflect strong market sentiment. Over the past six months, the stock has surged by 35.88%, indicating sustained investor interest. The year-long return of 53.76% further underscores the stock’s attractive performance. Despite a slight dip of 0.92% on the most recent trading day, the overall trend remains positive, aligning with the bullish technical grade assigned.

Investor Takeaway

Investors looking for exposure to the public sector banking space may find Canara Bank’s current 'Buy' rating compelling. The combination of quality lending practices, fair valuation, strong financial growth, and positive technical momentum provides a comprehensive rationale for this recommendation. It is advisable for investors to monitor ongoing quarterly results and sector developments to maintain an informed view, but the current data as of 20 January 2026 supports a constructive stance on the stock.

Conclusion

In summary, Canara Bank’s 'Buy' rating by MarketsMOJO reflects a well-rounded assessment of its current market position and prospects. The rating update on 03 September 2025 set the stage, but the latest financial and market data as of 20 January 2026 confirm the stock’s attractiveness. Investors seeking a blend of quality, growth, and reasonable valuation in the public sector banking sector should consider Canara Bank as a viable investment option.

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