Canara Bank (CANBK)

FairStock Score: 83/100 — HIGH CONVICTION

Score breakdown: P/E: 3/3 · ROCE: 0/2 · Growth: 2/2 · Dividend: 1/1

Key Financials

Strengths

• P/E of 7.07 and P/B of 1.21 against a 17.42% ROE offer a reasonable earnings yield of over 14%.
• Graham Number of ₹230.11 and stated margin of safety of 31.61% provide a value cushion at the current price.
• Piotroski F-Score of 8/9, positive free cash flow of ₹58,232 Cr, and ₹5,174 Cr latest quarter net profit indicate sound financial health.
• Sales growth of 30.64%, 62.93% government promoter holding, and a 2.54% dividend yield add stability and income support.

Concerns

• Profit growth is -5.96% despite 30.64% sales growth, suggesting revenue is not translating into bottom-line gains.
• Debt/Equity of 14.67 and an Altman Z-Score of 0.34 reflect the high leverage inherent to banking; a bad credit cycle could hit earnings hard.
• The DCF intrinsic value of ₹3,358.71 looks unreliable for a leveraged bank and could mislead an investor seeking safety.
• EV/EBITDA of 1749.19 is meaningless for banks and should not be used for comparison or valuation.

AI Analysis

When I look at Canara Bank at ₹140.90, a market cap of ₹1.43 lakh crore and a P/E of 7.07, my first response is genuine interest. Ben Graham taught me to buy dollar bills for fifty cents, and here the Graham Number is ₹230.11, well above the price, with a stated margin of safety near 31.6%. The book value is ₹116.22, so I am paying 1.21 times book for 17.42% return on equity. That combination—P/B above 1 but ROE comfortably above 17%—is not obviously expensive. The Piotroski F-Score of 8/9 tells me the financial condition is clean, and the government's 62.93% promoter stake provides stability though not an economic moat. Still, I don't paint everything gold. Sales grew 30.64% but profit fell 5.96%, so the latest quarter's ₹5,174 crore net profit is not converting revenue into earnings. That divergence is the first thing I would investigate. Banking is cyclical and highly leveraged—debt/equity of 14.67 is structural, but it also means mistakes amplify. The Altman Z-Score of 0.34 is not as meaningful for a bank as for a factory, yet it reminds me leverage is a double-edged sword. I also ignore the ₹3,358 DCF figure; for a leveraged lender, small assumptions explode into fantasy values. I anchor to Graham and book value. The 52-week range of ₹103.55 to ₹162.89 shows the market itself does not know what this bank is worth. At current levels, with a 2.54% dividend and positive free cash flow of ₹58,232 crore, Canara Bank looks like a cyclical value proposition: decent quality, fair price, and some downside cushion from book value. If profits resume growing, the market will reassess; if not, book value gives comfort. I would keep it on the short list, but only with modest size.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer