Stock to BUY: This PSU bank stock hits 15-year high; brokerages see up to 17 per cent upside after strong Q2 results

Canara Bank Share Price: Canara Bank shares surged over 4 per cent to Rs 137 in Friday’s trade, hitting a fresh 15-year high, after the lender reported a robust September-quarter performance. The stock, which has recovered nearly 75 per cent from its March lows of Rs 78, is trading at levels last seen in November 2010. In this scenario, brokerages have raise their target on the stock.

Canara Bank Q2FY26 result highlights

The rally follows a strong set of Q2FY26 earnings, with the bank reporting a consolidated net profit of Rs 4,774 crore, up 18.93 per cent year-on-year, beating market expectations. Operating profit rose 12.2 per cent to Rs 8,588 crore, while earnings per share (EPS) jumped 20.68 per cent to Rs 21.01.

Add Zee Business as a Preferred Source

Canara Bank’s overall business expanded 13.55 per cent year-on-year to Rs 26.78 lakh crore during the quarter. Deposits grew 13.4 per cent to Rs 15.27 lakh crore, while advances rose 13.74 per cent to Rs 11.51 lakh crore.

Retail credit was the standout performer, rising 29.11 per cent. Within this, housing loans grew 15.25 per cent and vehicle loans 25.58 per cent.

The lender’s asset quality also improved notably — gross NPAs declined to 2.35 per cent from 2.69 per cent in the previous quarter, and net NPAs fell to 0.54 per cent from 0.63 per cent. Provision coverage ratio strengthened to 93.59 per cent.

Canara Bank Share: Should you buy, sell or hold

Following the earnings, brokerages revised their outlook on the stock. Antique Stock Broking maintained a Buy rating and raised its target price to Rs 160 from Rs 140, citing strong loan growth and improving profitability.

HDFC Securities reiterated an Add call with a target of Rs 140, while Morgan Stanley maintained an Underweight stance but lifted its target to Rs 115 from Rs 95, noting short-term profit gains from higher other income.

Antique highlighted that the Q2 profit of Rs 4,774 crore — up 19 per cent YoY — was driven by better-than-expected non-core income and robust retail momentum. It expects margins to stabilise in Q3 and improve by Q4FY26, aided by an anticipated Rs 1,930 crore one-time gain from a subsidiary stake sale.

Profitability and capital strength

Canara Bank’s Return on Assets (RoA) improved by 7 basis points to 1.12 per cent, while Return on Equity (RoE) stood at 20.56 per cent. The Capital Adequacy Ratio was a healthy 16.2 per cent, with CET1 at 12.21 per cent.

Despite a marginal dip in Net Interest Margin (NIM) to 2.52 per cent, the bank’s improved efficiency and strong credit growth helped sustain investor optimism.

Institutional confidence builds

The bank’s market capitalisation now stands at Rs 1.25 lakh crore. Institutional investors have been steadily increasing their exposure — FII and DII holdings rose to 11.89 per cent and 12.23 per cent, respectively, from 11.38 per cent and 11.41 per cent in the June quarter.

With 38 mutual fund schemes owning a 5.71 per cent stake and over 1.56 lakh retail shareholders holding 7.43 per cent, Canara Bank’s strong fundamentals and earnings visibility continue to underpin the stock’s upward trajectory.