Canara Bank Share Price on 3 December 2025: PSU Bank Sell-Off Tests Rally After ₹3,500-Crore AT1 Bond Boost

Canara Bank’s stock (NSE: CANBK, BSE: 532483) spent most of 3 December 2025 under pressure, caught in a broad sell-off in public sector banks (PSBs) even as the lender’s fundamentals and capital position continue to improve.

Canara Bank Share Price Today: Volatile Session After a Big Rally

By around midday on 3 December 2025, Canara Bank shares were trading in the ₹145–146 zone on the BSE, down a little over 4% from Tuesday’s close of about ₹152.05. Intraday, the stock oscillated roughly between ₹146.25 and ₹152.90. ^[1]

Earlier in the morning, data from MarketsMojo showed: ^[2]

Open: ~₹152.80
Early intraday high: ~₹152.95
Early intraday low: ~₹150.20
Last traded price (09:44 IST): ₹150.61, about 1.45% lower vs the previous close of ₹152.03
Volume by mid-morning: ~7.8 million shares with turnover around ₹118 crore

Later price feeds from Business Standard and other live tickers showed the stock slipping further towards the mid‑₹140s, with intraday declines in the 3.5–4.5% range as selling in PSU banks intensified. ^[3]

Despite today’s weakness, the medium-term performance remains strong:

6‑month gain: roughly 25–27%
1‑year gain: around 40–43%
3‑year gain: about 130%, significantly ahead of the benchmark indices. ^[4]

The stock is also trading close to the upper end of its recent range:

52‑week high: ~₹154–154.2 (touched on 2 December 2025)
52‑week low: ~₹78.6 (on 3 March 2025). ^[5]

In other words, today’s drop looks more like a sharp pause after a substantial rally rather than a breakdown by itself.

Why PSU Banks – and Canara Bank – Are Under Pressure Today

The main macro trigger for today’s slide came from New Delhi, not Bengaluru.

On 3 December 2025, the Minister of State for Finance, Pankaj Chaudhary, clarified in Parliament that there is no proposal to raise the foreign direct investment (FDI) limit in public sector banks from 20% to 49%. ^[6]

That matters because:

Earlier media reports had suggested a possible FDI relaxation in PSBs.
PSU bank stocks had already rallied hard on hopes of deeper reforms and higher foreign participation.

Once the clarification arrived, traders quickly took profits:

The Nifty PSU Bank index was down over 3% intraday on 3 December.
Moneycontrol reported that Canara Bank, Bank of Baroda and Bank of India fell over 3% each, while other PSU lenders like PNB, Union Bank, UCO Bank and others also declined. ^[7]

This comes immediately after a powerful run-up:

Business Standard noted on 1 December 2025 that the Nifty PSU Bank index had bounced back 55% from its 52‑week low on 3 March 2025, hitting an all‑time high on 26 November.
On the same day, Canara Bank traded around ₹153.68, near its 52‑week high, alongside SBI, Bank of Baroda and Indian Bank. ^[8]

So today’s sell-off is less about bank-specific bad news for Canara and more about position squaring in a sector that has already delivered outsized gains in 2025.

Fresh ₹3,500-Crore AT1 Bond Issue: Capital Gets a Boost

Against the backdrop of this near-term volatility, Canara Bank has just taken a significant step to strengthen its capital base.

Multiple sources – including The Economic Times, Financial Express, Business Today, PSUConnect and Reuters – confirm that the bank has successfully raised ₹3,500 crore through Basel III‑compliant Additional Tier I (AT1) bonds: ^[9]

Key details:

Issue size:
- Base issue: ₹1,000 crore
- Green-shoe option: ₹2,500 crore, fully subscribed
Total amount raised:₹3,500 crore (₹35 billion)
Instrument: Unsecured, listed, non-convertible, perpetual AT1 bonds
Coupon: Around 7.55% per annum
Face value: ₹1 crore per bond
Issue opened & closed:28 November 2025
Allotment completed:2 December 2025
Investors: Placed with about 37 investors, according to Financial Express. ^[10]

AT1 bonds count as Additional Tier I capital, which helps the bank:

Support balance-sheet growth without diluting equity.
Maintain comfortable capital adequacy ratios under Basel III norms.

The timing – just ahead of the RBI’s December policy meeting – also suggests Canara Bank is front‑loading capital in case of any changes in rate or regulatory environment. ^[11]

Earnings Snapshot: Q2 FY26 Shows Strong Profit and Cleaner Balance Sheet

The fundamental picture for Canara Bank has been steadily improving, especially on profitability and asset quality.

For Q2 FY26 (quarter ended September 2025):

Standalone net profit: About ₹4,774 crore, up roughly 18.7–18.9% year‑on‑year. ^[12]
Operating profit: Around ₹8,588 crore, up 12.2% YoY. ^[13]
Global business (deposits + advances): ~₹26.79 lakh crore, up 13.55% YoY. ^[14]
- Global deposits: ~₹15.28 lakh crore, +13.4% YoY
- Global advances: ~₹11.51 lakh crore, +13.74% YoY

On margins and core income:

Net Interest Income (NII) actually declined ~2% YoY, to about ₹9,141 crore. ^[15]
Net Interest Margin (NIM) compressed to roughly 2.52% (annualised) vs 2.88% a year ago, as higher funding costs and aggressive deposit competition bit into spreads. ^[16]

On asset quality, the progress is striking:

Gross NPA ratio: about 2.35%, down 138 bps YoY. ^[17]
Net NPA ratio: down to roughly 0.54% from 0.99% a year earlier. ^[18]
Provision Coverage Ratio (PCR): close to 93.6%, up about 270 bps YoY, offering a hefty cushion. ^[19]
Credit cost: about 0.68% (annualised), down almost 30 bps YoY. ^[20]

The bank has also been pushing RAM (Retail, Agriculture & MSME) lending:

RAM credit grew nearly 17% YoY to ~₹6.71 lakh crore, with retail loans up ~29%, including double‑digit growth in housing and vehicle loans. ^[21]

The only soft spot is CASA (low-cost current and savings deposits):

CASA ratio stands near 30.7%, slightly below management’s guidance of ~32% for March 2026. ^[22]

Overall, Q2 numbers portray a PSU bank that is growing, cleaning up its book, but facing margin pressure – a pattern seen across much of the system.

Valuation Check: Still Cheap vs Fundamentals?

On current numbers, Canara Bank does not look expensive by classical banking metrics.

Business Standard data for early December 2025 shows: ^[23]

TTM EPS: ~₹19.3
P/E: roughly 7.5–7.7×
Book value per share: around ₹120 (consolidated book value slightly lower, ~₹105k crore equity vs market cap ~₹1.34 lakh crore)
Price-to-book (P/B): about 1.2×
Dividend yield: around 2.6%, with a healthy payout ratio near 20% in recent years.

Screener data also highlights:

5‑year profit CAGR: about 61%
3‑year profit CAGR: ~42%
Latest Return on Equity (RoE): ~18%, with RoE over the last 3–5 years in the mid‑teens. ^[24]

On the flip side, the bank carries:

Large contingent liabilities (over ₹4 lakh crore),
Low interest coverage on a reported basis, and
A sizeable chunk of other income (over ₹33,000 crore), which investors rightly scrutinise for sustainability. ^[25]

So the market is essentially saying:

“Yes, profits and RoE look solid, but this is still a PSU bank with policy risk, heavy regulation, and a history of credit cycles. We’ll pay a moderate multiple, not a private-bank premium.”

What Are Analysts Saying About Canara Bank Now?

There isn’t a single “official” target – different aggregators show slightly different pictures – but the broad message is that most analysts are positive, with upside that is now more modest after the recent rally.

Consensus Targets

Investing.com (19 analysts):
- Average 12‑month target: ~₹147
- High: ~₹171
- Low: ~₹110
- Consensus rating:“Buy” – about 14 Buy, 1 Hold, 2 Sell. ^[26]
TradingView forecast page:
- Average analyst target: ~₹148.2
- Range:₹115–171. ^[27]
TipRanks (India ticker):
- In the latest month, 4 analysts have rated Canara Bank “Buy”,
- Average target over the last 3 months: ~₹150. ^[28]
Trendlyne (4 brokers tracked):
- Average target:₹129, implying low‑double‑digit downside from current levels depending on the live price. ^[29]

So depending on which dataset you look at, the street’s fair value for Canara Bank sits somewhere in the ₹130–150 band, clustering not far from where the stock trades today.

Individual Brokerage Views

Motilal Oswal (9 November 2025) reiterated a “Buy” rating with a target of ₹153, after Q2 FY26 earnings:
- They highlighted a 19% YoY growth in profit and a beat on other income, but also noted NIM compression and flat QoQ profits. ^[30]
An earlier July 24, 2025 Motilal Oswal report had a target of ₹135, indicating that broker targets have been gradually revised higher as fundamentals and the share price improved. ^[31]

The picture is fairly clear:

Fundamentally, analysts like the story – improving asset quality, strong RoE, and PSU-bank rerating.
But after a 40%+ 1‑year rally, a lot of that optimism is already priced in, so upside from current levels looks more selective and time-horizon dependent rather than a slam-dunk value play.

Short-Term Technical and Quant Views

For traders peering at ranges and levels rather than balance sheets:

EquityPandit’s recent weekly outlook pegs a trading band of roughly ₹139.9 on the downside and ₹161.5 on the upside for the current week, with last week’s range between ₹145.3 and ₹152.5. ^[32]
Short-term algorithmic models like MunafaSutra generate intraday targets clustered in the low‑₹150s, with nearby supports and resistances between ~₹148–155. ^[33]

These models are mechanical, based on past price/volume behaviour. They can be useful for very short-term trading frameworks, but they do not “know” about things like FDI policy headlines or RBI decisions.

For longer horizons, some AI-driven sites such as WalletInvestor project a gradual upward drift for the stock over the next few years, but those forecasts are effectively statistical extrapolations and should be treated as rough scenarios, not destiny. ^[34]

Sector Context: PSBs Are Back in Fashion

Part of the Canara Bank story is really a PSU banking story:

CareEdge data cited by Business Standard shows PSU banks’ Q2 FY26 net profit growing 4.7% YoY, vs a 2.1% decline for private banks, thanks to better fee income, treasury gains and more lending headroom (lower credit‑deposit ratios). ^[35]
The Nifty PSU Bank index has surged to new highs in 2025, rebounding about 55% from its March low. ^[36]
An ET piece on the Nifty Bank index points out that AU Small Finance Bank has delivered ~64% one-year returns and that Canara Bank is the second-best performer in the index, underscoring how investors have re‑rated select lenders. ^[37]

This matters because a lot of Canara’s price action is now tied not just to its own fundamentals, but also to how the market feels about PSBs as an asset class – reforms, ownership overhang, capital raising, and the risk that sentiment can swing sharply on policy headlines (as we saw today with the FDI clarification).

Key Positives for Canara Bank

Putting the data together, the main bullish arguments often cited by market participants and research houses include:

Improving asset quality: GNPA down to ~2.35% and NNPA near 0.5%, with a PCR above 93%. That’s a long way from the stressed-asset era. ^[38]
Healthy RoE and profit growth: RoE in the high‑teens, 5‑year profit CAGR above 60%, and double‑digit growth in retail/MSME credit. ^[39]
Capital strength: Fresh ₹3,500‑crore AT1 issue boosts Tier I capital and supports further growth without immediate equity dilution. ^[40]
Valuation comfort: Trading around 1.2× book and ~7–8× earnings, cheaper than many private-sector peers despite comparable RoE. ^[41]
Sector tailwind: PSU banks, as a group, are enjoying better profitability, lower slippages and still‑attractive valuations relative to broader Indian financials. ^[42]

Key Risks to Watch

On the risk side, investors keep highlighting:

Margin pressure: NII decline and NIM compression show that funding costs are rising faster than yields, a risk if rate cuts continue or deposit competition heats up. ^[43]
Policy and ownership overhang: Events like today’s FDI clarification demonstrate how government decisions can move PSBs sharply, independent of fundamentals. ^[44]
Contingent liabilities and legacy risks: Large off‑balance‑sheet exposures mean that credit costs could spike again in a downturn. ^[45]
PSU perception discount: Even with better numbers, state-run banks often trade at a structural discount due to governance concerns and the possibility of future directed lending or consolidation moves.

Bottom Line: What Today’s Move Signals for Canara Bank Stock

On 3 December 2025, Canara Bank’s stock is down sharply on the day, but not broken:

The sell-off is primarily sector‑driven, triggered by the government’s denial of an FDI hike in PSU banks. ^[46]
Under the surface, the bank has just strengthened capital with a fully subscribed ₹3,500‑crore AT1 issue, and is coming off a solid Q2 FY26 with better asset quality and strong RoE. ^[47]
Valuations remain reasonable, but after a big rally, consensus targets cluster around current levels, suggesting that future returns may depend more on sustained earnings growth and continued sector re‑rating than on “cheapness” alone. ^[48]

For long-term investors, Canara Bank today looks like a classic PSU‑bank trade in its mature phase:

The early, obvious value has already been harvested.
What remains is a more nuanced bet on execution, asset quality discipline, deposit mobilisation, and policy stability.

For short‑term traders, the stock is caught between profit‑taking after a big run and ongoing institutional interest and high liquidity, making it a volatile but liquid candidate for tactical positions. ^[49]

References

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GSK Stock Outlook December 2025: Q3 Beat, Buybacks and Big FDA Decisions Shape 2026 Forecasts

HSBC Holdings Plc Stock on 3 December 2025: New Chair, Softer BoE Capital Rules and AI Push Shape the 2026 Story