IIFL has recommended to add Yes Bank with 12-month price target of Rs 134, in its report dated 1 August, 2008. “Yes Bank reported a refreshingly good set of numbers in an otherwise forgettable quarter for the banking sector. 1QFY09 net profits grew 51%YoY driven by strong loan and fee income growth, lower operating costs and partially offset by higher provision charges. Key profitability ratios remain good, with annualized ROA of 1.3% and ROE of 16%. MTM losses on bond investments were at Rs 160-170 million. Growth so far has been well-rounded and healthy and the recent capital infusion of USD 85 million would see it through in FY09 without resorting to any further equity issuance. While earnings are estimated to grow at a respectable 37% CAGR over FY08-10, we do not expect the stock to rerate beyond our fair value target of 2.5x FY09 PB (Rs 134) in the current environment. ADD”.

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