Canara Bank an underperformer: Karvy

Karvy Stock Broking has rated Canara Bank as an underperformer with a price target of Rs 165 in its April 20, 2009 research report. “In 4th QFY09, we expect Canara Bank to record 20% (Y/Y) growth in deposits and 28% growth (Y/Y) in net advances and the bank’s total interest income and interest expenses are expected to grow by 27% (Y/Y) and 26.7% (Y/Y) respectively; NII is expected to grow by 28% (Y/Y) to Rs 11.8 billion. We expect moderation in fee income growth 16.7% (Y/Y) to Rs 3.1 billion. We estimate that the bank’s other income would grow by 11% (Y/Y) and total net income would grow by 21% (Y/Y) respectively.”

“Higher jump in GNPA would lead the bank to make loan losses provisions of Rs 4.2 billion against Rs 3.4 billion in Q4FY08, on investment depreciation provisions front the bank has some cushion. We estimate the bank’s bottomline to grow by 18% (Y/Y) to Rs 5.4 billion. We revise our earning estimates downward for FY10 by 15% to Rs 14.2 billion to factor to factor in lower business growth, pressure on margin and higher loan losses provisions. We rate the stock as an Under Performer with a price target of Rs 165 at 1.08x adjusted book value FY2010,” says Karvy Stock Broking’s research report.

Tags: brokerage calls, Canara Bank, karvy, underperformer

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