MarketsMOJO Upgrades Canara Bank Stock to 'Hold' Based on Strong Fundamentals and Attractive Valuation

MarketsMOJO, a leading financial analysis firm, has recently upgraded its stock call on Canara Bank, a largecap public bank, to 'Hold'. This decision is based on the bank's strong provisioning practices, healthy long-term growth, attractive valuation, and high institutional holdings.

Canara Bank has a strong Provision Coverage Ratio of 65.38%, indicating its ability to handle potential loan losses. Its Net Interest Income (ex other income) has grown at an annual rate of 22.56%, while its net profit has seen a significant increase of 106.80%. Additionally, with a ROA of 1, the stock is currently trading at a discount compared to its historical valuations, making it an attractive investment option.

In the past year, Canara Bank's stock has generated a return of 32.19%, while its profits have risen by 23.2%. This is reflected in the company's low PEG ratio of 0.3, indicating its undervalued status. Moreover, the bank has a high institutional holding of 22.9%, which suggests that these investors have the capability and resources to thoroughly analyze the company's fundamentals.

However, Canara Bank's results for the quarter ending in June 2024 were flat, with a significant decline in PBT LESS OI(Q) at Rs 14.92 crore, falling by -91.9%. The bank's CREDIT DEPOSIT RATIO(HY) is also at its lowest at 70.88%, indicating a decrease in its lending activities. Furthermore, NON-OPERATING INCOME(Q) accounts for 99.72% of the bank's Profit Before Tax (PBT), which could be a cause for concern.

From a technical standpoint, Canara Bank's stock is currently in a Mildly Bearish range, with its MACD and KST technical factors also showing a Bearish trend. However, with its strong fundamentals and attractive valuation, MarketsMOJO has upgraded its stock call on Canara Bank to 'Hold'.