1. At a Glance
Canara Bank just flexed a ₹3,233 Cr net profit for Q1 FY26—up 21.7% YoY, with deposits inching toward ₹14.5 Lakh Cr and NPAs declining faster than your weekend savings. It trades at 0.98x book value with a dividend yield of 3.5%. It’s cheap. It’s chunky. But is it charming? That’s what we’re here to find out.
2. Introduction with Hook
If Canara Bank were a Bollywood actor, it’d be Nana Patekar—old school, underrated, occasionally explosive, and somehow still in the game. From near-death NPAs in FY18 to doubling its profits in the last 2 years, this government-owned behemoth has quietly morphed from “Oh God, not a PSU bank!” to “Wait, should I be buying this?”
EPS is up 4x in 4 years. Gross NPA now at 2.69% (from 7% in FY22). Your FD might not match that growth.
3. Business Model (WTF Do They Even Do?)
In technical terms, Canara Bank lends money, collects deposits, earns interest spreads, and occasionally panics over defaults. In plain English:
“They borrow cheap from savers, lend to borrowers who promise to behave, and hope they don’t default.”
It also offers retail banking, corporate banking, MSME credit, housing loans, insurance partnerships, and government schemes galore (PMAY, MUDRA, etc.). Basically, if it involves money and a counter queue, they do it.
Also merged Syndicate Bank in 2020. So now it has double the branches and twice the legacy IT pain.
4. Financials Overview
| Metric (Q1 FY26) | Value |
|---|---|
| Revenue | ₹31,523 Cr |
| Net Interest Income (NII) | ₹9,531 Cr |
| Net Profit | ₹3,233 Cr |
| YoY Profit Growth | +21.7% |
| Gross Advances | ₹9.6 Lakh Cr |
| Deposits | ₹14.56 Lakh Cr |
| Net NPA | 0.63% |
Commentary:
NII rising. NPAs falling. Other income still doing heavy lifting. Operating expenses are tight but manageable—Cost-to-Income at 47%.
5. Valuation
Fair Value Range: ₹125 – ₹145
- P/E Method: EPS (FY25) = ₹19.34. Assign 7.5x (fair for PSBs) → FV = ₹145
- P/B Method: Book value = ₹116. Assign 1.1x multiple → FV = ₹127.6
At ₹114, it’s trading at 5.57x earnings and below book. Cheap? Yes. Risk-free? Not really.
If PSU banks were Thali meals, Canara is the one with all items refilled twice—but also includes that one thing you didn’t want (read: contingent liabilities).
6. What’s Cooking – News, Triggers, Drama
- Q1 FY26 Results: ₹3,233 Cr PAT, NIM at 3.05%, asset quality improved
- EGM Just Announced: Corporate drama loading?
- Security Cover Update: 1.84x asset coverage on ₹52,989 Cr unsecured debt—thankfully no Titanic iceberg here.
- FII Interest: Up from 8.4% to 11.4% in a year. Smart money warming up.
- Merger Hangover: Finally over. Integration with Syndicate mostly complete.
Plot twists? None yet. But it’s a PSU. Give it time.
7. Balance Sheet
| Metric (₹ Cr) | FY25 |
|---|---|
| Equity Capital | ₹1,814 |
| Reserves | ₹1,03,603 |
| Deposits | ₹14,56,495 |
| Borrowings | ₹89,665 |
| Other Liabilities | ₹79,114 |
| Total Liabilities | ₹17,30,691 |
| Total Assets | ₹17,30,691 |
Jumbo-sized, but surprisingly stable. Think of it as a well-fed elephant: heavy but hard to tip over.
8. Cash Flow – Sab Number Game Hai
| FY | CFO | CFI | CFF | Net Cash |
|---|---|---|---|---|
| FY23 | -39,978 | -1,156 | 445 | -40,689 |
| FY24 | 15,046 | -1,750 | -3,834 | 9,462 |
| FY25 | 60,669 | -2,437 | -3,506 | 54,725 |
Key takeaway: Operating cash flow exploded in FY25. Even banks like getting paid on time.
9. Ratios – Sexy or Stressy?
| Ratio | Value (FY25) |
|---|---|
| ROE | 18% |
| CARA (Capital Adequacy) | 16.28% |
| Gross NPA | 2.69% |
| Net NPA | 0.63% |
| CASA Ratio | 32.29% |
| Cost of Funds | 5% |
ROE is red hot. NPAs are chilled. CARA is healthy. All signs that this ain’t the same PSU bank from 2017.
10. P&L Breakdown – Show Me the Money
| FY | Revenue (Cr) | PAT (Cr) |
|---|---|---|
| FY23 | ₹85,885 | ₹11,345 |
| FY24 | ₹1,10,519 | ₹15,401 |
| FY25 | ₹1,21,601 | ₹17,692 |
Net profit up 56% in 2 years. But don’t forget: ₹31,000 Cr of FY25 income is “Other Income.” Which, in bank terms, often translates to “non-loan stuff we don’t want to talk about.”
11. Peer Comparison
| Bank | P/E | ROE % | Gross NPA % |
|---|---|---|---|
| SBI | 9.7 | 17.2 | 2.4 |
| BoB | 6.17 | 15.5 | 3.2 |
| Union Bank | 5.88 | 17.1 | 3.7 |
| PNB | 6.88 | 15.2 | 5.0 |
| Canara Bank | 5.57 | 17.8 | 2.7 |
Looks like the nerdy kid who scored 97% but got no medals. Undervalued. Underappreciated. Slightly cooler than PNB.
12. Miscellaneous – Shareholding, Promoters
| Stakeholders | Jun 2025 |
|---|---|
| Promoters (GoI) | 62.93% |
| FIIs | 11.38% |
| DIIs | 11.41% |
| Public | 14.27% |
FII holding up from 8.4% → 11.4% in 1 year = something’s brewing. Also, public investors now at ~1.7 Cr, up from 6.4 lakh in 2022. Retail is sniffing value.
13. EduInvesting Verdict™
Canara Bank is like an old Ambassador car with a new engine—still heavy, still clunky, but surprisingly fast on straight roads. With improving asset quality, growing profits, and a low valuation, it deserves a second glance.
Verdict:
A PSU bank that might not give you FinTech vibes but definitely gives you solid dividend, rising EPS, and a surprisingly clean balance sheet. Just don’t expect it to trend on X.
Metadata:
Written by EduInvesting Team | July 25, 2025
Tags: Canara Bank, PSU Bank, Q1 FY26, Banking Stocks, EduInvesting Premium
