Canara Bank stock: Broker lifts target to Rs 160 after Q2 beat

Published on 11/01/2026 at 01:01 | Editorial responsibility: Rafael Müller, Editor-in-Chief AD HOC NEWS

Canara Bank stock drew a bullish call after core earnings beat estimates. Loan growth and margin support remain central to the outlook.

Core earnings strengthen the outlook

Prabhudas Lilladher retained its BUY recommendation after Canara Bank exceeded its core earnings estimates in Q2 FY27.
Loan growth, stable margins and improved asset quality support the broker's view, while funding costs and credit provisions remain key risks.
Canara Bank's corporate and mid-corporate loan pipeline points to continued lending momentum into FY27.

Canara Bank, INE476A01014, Illustration mit AI erstellt.

Prabhudas Lilladher retained its BUY recommendation on Canara Bank after the bank's core operating performance exceeded the broker's estimates in the quarter ended September 30, 2026. The research update, published by DSIJ on October 15, said the broker raised its target price to Rs 160 from Rs 150.

Loan growth supports earnings view

Canara Bank's net interest income rose 20.4 percent year on year to Rs 11,005 crore in Q2 FY27, according to the research summary. Reported net interest margin reached 2.55 percent, three basis points higher than in the previous quarter, while the broker said core profit after tax was 26.6 percent above its estimate.

Advances grew 20.4 percent year on year and 6.5 percent quarter on quarter, compared with deposit growth of 13.1 percent year on year. The corporate and mid-corporate pipeline stood at about Rs 47,000 crore, including sanctioned but undisbursed loans, giving the lender a visible source of future loan growth.

Asset quality improves, risks remain

Gross non-performing assets declined to 1.33 percent and net non-performing assets to 0.30 percent in Q2 FY27. Provisions were Rs 1,780 crore, below the broker's estimate of Rs 2,220 crore, although the report highlighted the potential impact of expected credit loss provisioning, margin repricing and drought-related exposure in Karnataka and Maharashtra.

Management expects net interest margin to remain near 2.55 percent. The broker also pointed to repricing across repo-linked and MCLR-linked loans, while noting that lower-spread FCNR(B) funding and treasury income pressure could limit the benefit.

Canara Bank in the Indian market

Canara Bank is an Indian public-sector bank founded in Mangalore in 1906. It provides broad banking services across retail, agriculture, MSME and corporate customer segments, with digital banking and financial inclusion among its stated priorities, according to the company profile. The bank competes with large Indian public-sector lenders including State Bank of India, Punjab National Bank and Bank of India, while its national reach distinguishes it from more regionally focused banks.