Accumulate YES BANK; target of Rs 354: Aditya Birla Money

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Accumulate YES BANK; target of Rs 354: Aditya Birla Money

Aditya Birla Money is bullish on YES BANK and has recommended accumulate rating on the stock with a target of Rs 354 in its January 25, 2012 research report.

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Aditya Birla Money is bullish on YES BANK and has recommended accumulate rating on the stock with a target of Rs 354 in its January 25, 2012 research report.

"Yes Bank announced its unaudited results for Q3FY12. The growth in top-line as well as bottom line came above our expectations on account of lower than estimates credit costs."

"Net Profit after tax for the current quarter increased 32.9% YoY mainly driven by strong net income growth. Net interest income grew by 32.3% YoY (10.9% QoQ) while growth in non-interest income stood at 30.8% YoY. The growth in NII was mainly driven by robust growth in customer assets (including credit substitutes) at 28.1% YoY (7.3% QoQ). Non Interest Income was up on the back of strong growth in Financial Advisory (50.6% YoY), Financial Markets (17.7% YoY), and Transaction Banking (28.3% YoY) business streams."

"Total Business of the bank grew by 17.3% YoY (5.8% QoQ) to Rs 828.0 bn. Advances grew (15.3% YoY, 4.9% QoQ) to Rs 358.7 bn, however including the credit substitutes advances grew healthy at 28.1% to Rs 437.5 bn. The bank has witnessed strong traction in SME and retail portfolio which currently constitutes 15.1% of the total loan book. During the quarter the bank has introduced six retail asset products including auto loans, CV financing, home loans, etc to enhance its product proposition for retail. Going forward, the management expects loan book (excluding credit substitutes) to grow by ~20.0%. Deposits on the other hand grew by 19.0% YoY (6.5% QoQ). The bank witnessed strong uptick in CASA balance post deregulation of savings rate by RBI in October. The bank saw an uptick of 1.6% in CASA balance from 11.0% in Q2FY12 to 12.6% in the current quarter aided by ~18% QoQ growth in current account balances and ~40.0% growth in savings balances. We expect CASA ratio to improve to 13.4% by FY12E and to 16.4% by FY13E. NPAs continue to be impressive with gross NPAs at 0.2% of gross advances and net NPA of 0.04%. Besides this, restructured advances remained unchanged sequentially at Rs 1.75 bn (0.49% of the advances) in the current quarter. The bank has seen rating upgrades for the corporates to which it has exposure, reflecting the superior quality of the loan book. The management is confident of maintaining the asset quality at current levels."

"Yes bank reported strong Q3FY12 numbers with stable asset quality and strong fee income growth. We have raised our earnings estimates by 2.6% and 2.8% for FY12E and FY13E respectively. The bank's stable asset quality, strong uptick in low cost CASA deposits, superior return ratios and adequate capitalization bodes well for its future growth. We estimate Yes Bank to report an EPS CAGR of 26.3% over FY11-FY13E. ABV is estimated to grow at 21.9% CAGR during the same period. The stock currently trades at 2.4x FY12E ABV and 2.0x FY13E ABV. We maintain our positive view on the stock and recommend Accumulate rating with a revised price target of Rs353.9 (Rs345.0 earlier), implying an upside potential of 10.8%," says Aditya Birla Money research report.      

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