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You are here : IndiaNotes >> Research & Analysis >> Companies >> YES Bank Ltd. >> Research

YES Bank 3QFY18: Strong momentum continued on most metrics; Buy

SPA Securities | 02 Feb, 2018  | Follow Author | Add to my Favourites 
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Yes bank continued its strong momentum on most of the metrics in P&L with 46% y-o-y (15% q-o-q) growth in loan book driving 25% y-o-y (flat q-o-q) NII growth, 42% y-o-y (14% q-o-q) other income growth and 38% y-o-y (5% q-o-q) PPOP growth. Higher credit cost (265% y-o-y & -6% q-o-q) resulted in lower PAT growth of 22% y-o-y (7% q-o-q) to INR 10bn.  Slippages pertaining to RBI’s divergence report were not only nil but there were recoveries as guided by the management in the last quarter. At FY19E BV of INR 152, we retain BUY with a TP of INR 406 in 14 months implying a P/BV of 3.2x.


·         Improved asset quality


·         Strong loan book growth led by corporate and retail banking


·         Stable Operating performance


Outlook & Valuation


Yes bank’s strategy of growing through small business loans and then cross selling to acquire customers has worked well for him. Its superior loan structuring skills and ability to upgrade / recover substantial amount of loans with only small proportion being declared as NPA is commendable. We expect strong loan book growth with focus on retail banking; robust CASA growth and superior loan structuring skill restricting overall LGD will drive earnings growth (~30% EPS CAGR over FY17-19E) and return ratios (20.4% ROE for FY19E) going ahead. We maintain our BUY rating on the stock with a TP of INR 406 in 14 months, implying a P/BV of 3.2x on FY19E BV of INR 131.

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About SPA Securities

SPA Securities was promoted by a team of finance professionals in 1995 with an objective to provide value added financial services. Initially, the Group focused as a niche financial solutions provider in corporate finance and wealth management to Indian companies and high net worth individuals. In January 2000, the Group expanded its operations and the range of services. Today, SPA provides services for securities broking, merchant banking, wealth management, financial advisory, corporate finance , risk management and insurance broking.


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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor accept any liability whatsoever arising from the use of any of the above contents.

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