Emkay Global has a buy call on Canara Bank shares with a price target of Rs 282.
According to the brokerage, Canara Bank reported higher-than-expected net profit of Rs 16.7 billion in the fourth quarter (although slightly below consensus), mainly helped by higher other income and lower provisions. Slippages were significantly higher at Rs 47.6 billion (3% of loans), excluding future retail exposure of Rs12 billion on which the bank carries a PCR of 60%.
“Overall credit growth was healthy and in line with the system at 10% yoy, but spreads were largely flat at 2.8% due to interest rate inversion on an a/c of slippages CBK indicated that the potential notional loss from now on its investment portfolio appears to be limited to Rs2bn, but we believe that rising G-sec yields could control the performance of Treasuries.
“We expect a gradual improvement in RoA/RoE to 0.6-0.7%/12-15% in FY23-25E from 0.5%/11% in FY22, thanks to better growth and lower LLP Keep buying with revised target price of Rs 282 (from Rs 290) based on (0.8x FY24E ABV) and sub investment of Rs 23 “said the brokerage.
Emkay Global has a holding rating on Reliance Industries stock with a price target of Rs 2,850 until FY26; therefore, RIL remains constructive on the mid-term refining outlook. MJ1 is on track for first gas at T3FY23. Jio is ready to roll out the pan-India 5G network. JioFiber added 2.7 million wireline broadband subscribers in FY22. Expansion of stores and digital emphasis will continue in retail. Giga factories are underway on 5,000 acres in Jamnagar.
“We are increasing FY23/24E GRM from $10/bbl each to $16/13 due to issues related to the Russian-Ukrainian conflict and general tightness in petroleum product markets. Capacity is absorbed. We are integrating also higher upstream gas prices We reduced Jio FY23e EBITDA by 3% due to outsourcing (offset by higher ARPU), while retail is down up 7%/5% in FY23/24 on better Q4 numbers vs peers. However, we are increasing our capex estimate for FY23E,” the brokerage said.
The brokerage doesn’t see too much of an upside in Indus Towers’ stock and has recommended keeping the stock.
“Indus’ business prospects continue to be primarily dependent on Bharti Airtel for additional tower additions, supported only by a one-time lease. While the sale of Vodafone PLC’s stake helped reduce receivables slightly, the inability to VIL to raise capital will continue to restrict investments in the network, in addition, the MSA recently concluded with a customer comes with a rental discount, which is negative for the growth of additional revenues, which is already lower Despite this, we are not building a lower ARPT due to management’s lack of disclosure regarding new rental pricing VIL’s timely payments on incremental billing even after MSA renewals (at lower rates reduced) lack clarity (cities, fiber, small cells, etc.); 4) timely payments and network investments by VIL; and 5 ) growth of Jio,” the brokerage said.
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