Canara Bank Ltd. - BUY
CMP Target Upside Tenure
Rs 368 Rs 497 35.3% 1 Year
Canara Bank’s improving asset quality, better NIM prospects and rising non-interest income bodes well for its profitability over FY17-19E. Hence we have assigned its core banking business 0.7x on FY19E BVPS to arrive at the value of Rs426/share. It holds 30% stake in Canfin Homes where the improving loan book and return ratios raises the prospects for further growth. We get the value of Rs28/share for Canfin Home based on 20% discount to current market price. Besides it also holds 51% stake in Insurance JV where we have assumed a value of Rs31/share. Our SOTP valuation gives the fair value of Rs 497 over the next 12 months.
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