Canara Bank shares – Fundamentals look strong and trading at relatively lower multiple

Canara bank shares are gaining today, after the company declared its September quarter result yesterday. At 2:20 p.m. IST, 31^st October 2025, its share price is up by 4.03%, trading at Rs 138.24. Nifty 50 index is down by 0.46% at this time.

Canara Bank’s profit and asset quality improved in the September quarter

Canara Bank’s profit in the September quarter increased year-on-year by 19%  to Rs 4,774 crore.  Net interest income came down year-on-year by 2% to Rs 9141.9 crore. This decline was due to the interest rate cuts announced by the RBI earlier this year. Net interest income (NII) is the difference between the interest that a bank charges from its borrowers and the interest that it pays to its depositors.

The steep rise in the company’s shares today is also because of the improvement in the quality of its assets. The loans given by a bank are its asset. Gross non-performing assets ratio (GNPA) of the bank came down in the quarter to 2.35% from 3.73% earlier. Non-performing assets or NPAs of a bank are loans on which interest or principal payments are overdue for more than 90 days.  Net NPA ratio also came down to 0.54% from 0.99% in the quarter. Net NPAs exclude provisions made for bad loans, in their calculation.

Canara Bank has one of the biggest gold loan portfolios among banks in India. Due to increase in gold loan prices over the past 1 year, the bank was able to give higher amount of loans for the same quantity of gold as collateral. This also benefitted the bank in the quarter. In the past one-year gold prices have increased by more than 50%.

Canara bank shares have outperformed benchmark indices this year

Year-to-date in 2025, Canara bank shares have gained 37.40%. Nifty 50 index has gained 8.54% in this period. Canara Bank’s shares have outperformed the Nifty 50 index by more than 28% in 2025. Nifty Bank Index has gained 13.22% year-to-date in 2025. Canara Bank has 2.71% weight in Nifty Bank index. The stock has outperformed the Nifty Bank index by around 24% this year.

Stock trading at a relatively lower multiple

Canara Bank shares currently are trading at a 12-months trailing Price-to-Earnings (P/E) ratio of 7.5. Nifty PSU bank index is currently trading at an average P/E ratio of 8.30. Constituents of Nifty Bank Index are currently trading at a P/E ratio of 15.09. So the stock seems to be relatively undervalued when compared to its peers in the banking industry.

Disclaimer : This content is only for informational purpose. It does not make any recommendation to act or invest.

Source : NSE, Canara Bank