Shares of Canara Bank experienced a significant decline on Thursday, October 14, 2026, falling 6.45 percent to trade at Rs 116.80. This dip brought the public sector lender's stock close to its 52-week low of Rs 116.55, recorded on October 1. The market reaction followed the bank's announcement of its second-quarter results for the fiscal year 2027.
Brokerages Remain Optimistic Despite Share Drop
Despite the sharp fall in share price, leading brokerage firms largely maintained a positive perspective on Canara Bank's stock. Analysts pointed to favorable valuations and improving fundamental performance as key reasons for their continued confidence.
Motilal Oswal Financial Services (MOFSL)
- MOFSL reaffirmed its 'Buy' rating on Canara Bank, setting a target price of Rs 160.
- The brokerage highlighted the bank's standalone profit after tax (PAT) for Q2 FY27, which reached Rs 5,170 crore. This figure represented an 8 percent year-on-year increase and a 7 percent quarter-on-quarter growth, surpassing MOFSL's estimates by 8 percent due to lower-than-expected provisions and operating expenses.
- Net interest income (NII) also saw robust growth, climbing 20 percent year-on-year and 8 percent quarter-on-quarter to Rs 11,000 crore, exceeding MOFSL's forecast by 3 percent.
- Canara Bank's net interest margin (NIM) improved by 3 basis points quarter-on-quarter to 2.55 percent, aligning with expectations. The bank has also maintained its FY27 NIM guidance of 2.5-2.6 percent.
JM Financial
- JM Financial upgraded its rating on Canara Bank to 'Buy' and increased its target price to Rs 150 from Rs 142.
- The upgrade was attributed to the stock's attractive valuations and the bank's improving financial health.
- Analysts noted that the stock had remained relatively flat over the past year despite a substantial 14 percent growth in its book value.
- JM Financial also pointed out that insurance fee income constituted a smaller portion of the bank's FY26 profit before tax (around 2 percent) compared to its broader coverage universe (5 percent), indicating a lower risk from potential regulatory changes by IRDAI.
- The brokerage raised its earnings per share (EPS) estimates for FY27 and FY28 by 6 percent and 5 percent, respectively, projecting a return on assets (RoA) of approximately 1 percent and a return on equity (RoE) of 17.6 percent over FY27-FY29.
Elara Capital
- Elara Capital also issued a 'Buy' recommendation for Canara Bank, with a target price of Rs 155.
- The brokerage valued the stock at 0.9 times its estimated adjusted book value (ABV) for September 2028, noting that the stock was currently trading at an attractive valuation of 0.8 times its September 2028 estimated ABV.
- Elara highlighted that while the bank's profitability still leaned towards non-core income, net interest margins were showing gradual improvement.
- Furthermore, asset quality remained stable, with credit costs under control, supporting a sustained RoA of 1-1.1 percent.
The consensus among brokerages suggests that despite the recent share price volatility, Canara Bank's underlying financial performance and valuation metrics present a compelling investment case.