Stock Market Today: Canara Bank Shares Rise After Q4 Results 2025 — More Steam Left?

Introduction

Canara Bank lit up the trading floor on Monday after announcing its Q4 FY25 earnings that surpassed street expectations. The public sector banking heavyweight reported a sharp rise in net profit, improved asset quality, and a confident outlook for FY26. Investors responded with enthusiasm as the share price surged over 5% intraday, placing the bank among the top gainers in the Nifty PSU Bank index.

But the big question remains: Does Canara Bank have more steam left, or is this a short-term spike driven by quarterly euphoria? In this deep-dive, we analyze the numbers, management commentary, analyst views, and broader banking sector cues to help decode what's next for Canara Bank.

Q4 FY25 Results Snapshot

Here are the key highlights of Canara Bank’s Q4 FY25 performance:

The bank’s profitability received a boost from a healthy rise in NII and lower provisioning requirements, thanks to a drop in bad loans. Notably, the net interest margin (NIM) improved to 3.12%, showcasing effective capital deployment and better credit appraisal.

What’s Fueling the Rally?

The jump in Canara Bank’s share price isn’t a one-day story. Here are the main factors supporting the rally:

 1. Strong Earnings Beat

The 30.4% year-on-year rise in net profit reflects strong fundamentals, prudent risk management, and effective cost control. Lower slippages and improved recoveries have also bolstered investor confidence.

 2. Improved Asset Quality

Gross and net NPAs continued to decline — a vital signal that Canara Bank is cleaning up its books and entering a new credit cycle with a stronger base.

 3. Attractive Valuations

Despite the recent rally, Canara Bank remains attractively valued compared to private peers. At a price-to-book (P/B) ratio of around 0.9x, it trades at a discount to its long-term average.

 4. Dividend Boost

The declaration of a ₹6.00 dividend per share is the highest in recent years. A higher dividend not only rewards existing investors but also attracts yield-seeking funds.

 5. Positive Management Commentary

CEO K. Satyanarayana Raju in his post-earnings call stated, “We see broad-based loan growth opportunities across infrastructure, MSME, and agriculture segments, and are aiming for double-digit credit expansion in FY26.”

Stock Price Performance

Before Q4 results, Canara Bank was already showing signs of resilience amid a volatile market. Here’s a snapshot of its recent stock price trajectory:

• YTD Return (2025): +22.6%

• 1-Year Return: +54.8%

• Last 5 Trading Days: +7.3%

The stock broke past key resistance levels at ₹450 and is now eyeing ₹480–₹500 zones in the near term.

Analyst Commentary: What Are Brokerages Saying?

 ICICI Securities

Rating: Buy
Target Price: ₹510
Comment: “The consistent improvement in margins and a controlled slippage ratio make Canara a top PSU pick. The valuation gap versus private banks offers re-rating potential.”

 HDFC Securities

Rating: Add
Target Price: ₹475
Comment: “The bank is seeing strong traction in corporate loans, especially in infra. We maintain a positive stance but advise caution near ₹500 levels.”

 Kotak Institutional Equities

Rating: Neutral
Target Price: ₹460
Comment: “The upside could be capped in the short term unless ROE crosses 13%. A wait-and-watch approach is preferred post Q1 FY26 results.”

The Road Ahead: FY26 Expectations

Canara Bank’s Q4 report card has clearly set the tone for a positive start to FY26. Here are key areas to watch:

1. Credit Growth

The bank aims for 12–14% loan growth, with a focus on infrastructure, renewable energy, and MSMEs.

2. Digital Push

Investments in mobile and online banking are yielding results. The management plans to introduce AI-enabled customer service bots and expand rural banking tech infra.

3. Slippages and Recoveries

Maintaining GNPA below 4.5% is the target. Aiding this are ongoing efforts to recover from written-off accounts and faster NCLT resolutions.

4. Rural Lending

The bank continues to be a major lender in India’s agrarian belt. With government push for rural infra and schemes like PM Vishwakarma Yojana, Canara is well-positioned to benefit.

Risks That Could Derail Momentum

While the outlook is optimistic, investors must be mindful of these risks:

• Global Interest Rate Volatility: Any sudden changes in global yield expectations could affect capital flows and sector valuations.

• Credit Quality Shock: A deterioration in SME or retail portfolios due to external shocks (like weather patterns or global demand slump) can hurt margins.

• PSU Reforms & Competition: As government moves toward consolidation and privatization, competitive pressures may increase.

Peer Comparison: Where Does Canara Stand?

While BOB leads in net profitability, Canara offers a balanced play with dividend support, improving asset quality, and a slightly better valuation base than PNB.

Technical Analysis: Bullish But Caution Advised

• Support Level: ₹435

• Resistance Zone: ₹495–₹500

• 200-DMA: ₹412

• MACD Indicator: Bullish crossover

• RSI: 71 (Overbought territory)

The current RSI indicates caution in the short term as the stock approaches overbought levels. However, a strong base around ₹435 gives comfort for long-term investors.

Investor Sentiment & Institutional Holdings

In the latest shareholding pattern (March 2025):

• FIIs: 13.4%

• DIIs: 17.9%

• Public: 16.2%

• Promoter (Govt. of India): 52.5%

Increasing FII interest shows growing global confidence in Indian PSU banks, with Canara being a prime example.

Final Verdict: Buy, Hold or Book Profits?

Canara Bank is showing a structural turnaround — not just a quarterly spike. The fundamentals are robust, the valuations remain appealing, and management execution is visibly improving.

Short-term traders may consider partial profit booking if the stock crosses ₹500 swiftly, given technical overbought signals.

Long-term investors can continue to hold or add on dips around ₹440–₹455 levels with a 12-month target of ₹530–₹550.

The story of Canara Bank’s Q4 FY25 performance isn’t just about numbers—it’s a reflection of how a large PSU bank can evolve with the times. With a strong balance sheet, digital acceleration, and a pro-growth management, Canara Bank is fast moving from a legacy institution to a growth-driven, tech-enabled public sector banking leader.

In a market that’s quick to discount PSU banks, Canara Bank is proving that patience pays — and perhaps, there’s more steam left in this engine.