Stock To Buy: Buy This Rakesh Jhunjhunwala PSB Stock For Over 35% Gain

Canara Bank in which the ace investor has a holding of 1.96% as of June 2022 has a 'Buy' call by Motilal Oswal for a target price of Rs. 300 per share. This at the current price of Rs. 221.6 per share means a potential upside of over 35%.

Stock To Buy: Buy This Rakesh Jhunjhunwala PSB Stock For Over 35% Gain

As per the brokerage's report, asset quality at the public sector lender continues to improve. "Canara Bank (CBK) reported a steady operating performance with NII growth of 10% YoY (7% miss). Healthy treasury gains and traction in fee income led to 13% beat in total revenue (16% YoY). Margin contracted 15bp QoQ to 2.8% while PPoP grew 21% YoY (18% YoY rise in Core PpoP)", said the lender.

Nevertheless, the management expects the situation to improve as the rising interest rates shall flow through going ahead. Outlook for the year ahead looks positive as the bank targets 15% growth in the Fy23.

The brokerage estimates an RoA/RoE of 0.8/13.8 per cent, respectively, by FY24 and maintained a Buy rating with a target price of Rs 300 apiece. The stock is valued at Rs. 300 based on 0.8x FY24E ABV. "SMA overdue declined to 1.29% from 1.53% in 4QFY22, while the restructured portfolio improved 36bp to ~2.4% of loans. We raise our PAT estimates by 14%/16% for FY23/24, respectively, to account for higher other income and loan growth. We expect CBK to deliver FY24E RoA/RoE of 0.8%/13.8% ", adds the brokerage.

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