Canara Bank is Rated Buy by MarketsMOJO

Current Rating and Its Significance

MarketsMOJO's 'Buy' rating for Canara Bank indicates a positive outlook on the stock, suggesting that investors may consider adding or holding the stock in their portfolios. This recommendation is based on a comprehensive evaluation of the bank's quality, valuation, financial trends, and technical indicators. The rating was revised on 03 February 2026, reflecting an improvement in the bank's overall fundamentals and market position. It is important to note that while the rating change date is fixed, the data and analysis presented here are current as of 26 February 2026, ensuring relevance for today's investment decisions.

Quality Assessment

As of 26 February 2026, Canara Bank demonstrates strong quality metrics. The bank maintains a low Gross Non-Performing Assets (NPA) ratio of 2.08%, signalling prudent lending practices and effective risk management. This low NPA ratio is a critical indicator of asset quality, especially in the public sector banking space where NPAs can often be elevated. Additionally, the bank has reported positive results for four consecutive quarters, underscoring consistent operational performance. The credit-deposit ratio stands at a healthy 77.09%, reflecting efficient utilisation of deposits for lending activities. These factors collectively contribute to the bank's 'good' quality grade, reassuring investors about the stability and reliability of its core business.

Valuation Perspective

Currently, Canara Bank's valuation is considered attractive. The stock trades at a Price to Book (P/B) ratio of 1.3, which is reasonable compared to its historical averages and peer group valuations. This suggests that the stock is fairly priced, offering value without excessive premium. The bank's Return on Assets (ROA) is 1.1%, indicating efficient utilisation of its asset base to generate profits. Moreover, the Price/Earnings to Growth (PEG) ratio stands at a low 0.3, signalling that the stock's price growth is well supported by its earnings growth. This valuation profile makes Canara Bank an appealing option for investors seeking exposure to the public sector banking sector at a fair price point.

Financial Trend Analysis

The latest data shows a robust financial trend for Canara Bank. The bank has achieved a remarkable compound annual growth rate (CAGR) of 68.28% in net profits over the long term, highlighting strong earnings momentum. Over the past year, net profits have risen by 24.7%, reflecting sustained profitability improvements. The bank's interest earned in the most recent quarter reached ₹31,981.60 crores, marking a peak in its revenue-generating capacity. These positive financial trends are supported by the bank's large-cap status and its position within the public sector banking sector, which benefits from government backing and a wide customer base. The consistent quarterly performance and upward trajectory in key financial metrics reinforce the 'positive' financial grade assigned to the stock.

Technical Outlook

From a technical standpoint, Canara Bank exhibits a bullish trend. The stock has delivered strong returns across multiple time frames as of 26 February 2026: a 1-day gain of 0.09%, 1-week increase of 6.29%, 1-month rise of 4.65%, and a 3-month appreciation of 5.73%. Notably, the 6-month return stands at an impressive 49.81%, while the year-to-date (YTD) gain is 2.52%. Over the past year, the stock has surged by 86.80%, significantly outperforming many peers in the banking sector. This sustained upward momentum is indicative of strong investor confidence and positive market sentiment. The technical grade of 'bullish' supports the current 'Buy' rating, suggesting favourable price action and potential for further gains.

Investment Implications

For investors, the 'Buy' rating on Canara Bank signals an opportunity to participate in a stock with solid fundamentals, attractive valuation, positive financial trends, and strong technical momentum. The bank's prudent asset quality management, combined with its growth in profits and reasonable valuation, provides a compelling case for inclusion in a diversified portfolio. While public sector banks can face sector-specific challenges, Canara Bank's current metrics and market performance suggest resilience and potential for continued value creation.

Summary of Key Metrics as of 26 February 2026

Canara Bank's current Mojo Score is 78.0, reflecting a strong overall assessment. The bank's quality grade is 'good', valuation grade is 'attractive', financial grade is 'positive', and technical grade is 'bullish'. These combined factors justify the 'Buy' rating and suggest that the stock is well-positioned for investors seeking growth with a reasonable risk profile. The stock's large-cap status further adds to its appeal by offering liquidity and stability within the public sector banking universe.

Looking Ahead

Investors should continue to monitor Canara Bank's quarterly results and sector developments, particularly any changes in asset quality or regulatory environment. The bank's ability to sustain its profit growth and maintain low NPAs will be critical to upholding its current rating. Given the current data and market conditions, Canara Bank remains a compelling choice for investors aiming to capitalise on the growth potential within India's public sector banking sector.

Conclusion

In conclusion, Canara Bank's 'Buy' rating by MarketsMOJO, last updated on 03 February 2026, is supported by strong quality metrics, attractive valuation, positive financial trends, and bullish technical indicators as of 26 February 2026. This comprehensive evaluation provides investors with confidence in the stock's potential for continued appreciation and stable returns.

Only Rs. 9,999 - Get MojoOne for 1 Year + 3 Months FREE (60% Off) Start Today