Canara Bank shares hit 52-week high; can the Jhunjhunwala stock touch Rs 440 mark?

Shares of Canara Bank climbed to a 52-week high in early deals today. The stock rose to a yearly high of Rs 392.75 against the previous close of Rs 388.15 on BSE. Market cap of Canara Bank stood at Rs 70,569 crore. Total 1.88 lakh shares changed hands amounting to a turnover of Rs 7.32 crore.

Rekha Rakesh Jhunjhunwala, wife of late investor Rakesh Jhunjhunwala, held 37,597,600 shares or 2.04 per cent in the public sector lender as on September 30. She has kept her stake unchanged in the bank for the last three quarters.

Canara Bank shares have lost 12 per cent since the beginning of this year and risen 58 per cent in one year. The banking stock hit a 52-week low of Rs 268.85 on February 24, 2023. Canara Bank has a one-year beta of 1.7, indicating very high volatility during the period.

In terms of technicals, the relative strength index (RSI) of the Canara Bank stock stands at 41.4, signaling the stock is trading neither in the oversold nor overbought zone.

Motilal Oswal has assigned a target of Rs 440 to the lender post Q2 earnings.

"Asset quality ratios have improved and the management expects to further reduce net NPAs at an accelerated pace. SMA book moderated to 0.7% in 2QFY24 against 1.1% in 1QFY24. We revise our earnings estimates slightly to factor in lower provisions and expect Canara Bank to deliver FY25 RoA/RoE of 1.1%/17.6%. We reiterate our BUY rating with a TP of INR440 (0.9x FY25E ABV)," said the brokerage.

Axis Securities said the stock can be bought in a range of Rs 372-366 for a target price of Rs 407-418. Stop loss can be fixed at Rs 350.

“Canara Bank broke above the multiple resistance zone at Rs 348 in mid-September, rallying to Rs 387 in the weekly charts. After retesting the breakout area, it bounced back sharply, confirming the continuation of the uptrend. The stock is exhibiting a pattern of higher highs and lows on the weekly chart, forming an upward-sloping trendline, indicating a strong uptrend. The stock experienced a surge in trading volume during the breakout, indicating a substantial increase in market participation at the breakout level. The weekly strength indicator RSI given a crossover above its reference line generated a buy signal,” said Axis Securities.

The lender reported ad 43% rise in net profit at Rs 3606 crore in Q2 against a profit of Rs 2525 crore in the September 2022 quarter.

NII climbed 20% to Rs 8903 crore in Q2 compared to Rs 7433.8 crore in the year-ago period.

Total provisioning slipped to Rs 2,608 crore in the last quarter from Rs 3,637 crore in the year-ago period. Gross non-performing assets (NPAs) declined to 4.76 per cent of total loans in the September 2023 quarter over 6.37 per cent in the year-ago period.

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