Buy YES BANK; target of Rs 400: Motilal Oswal

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Buy YES BANK; target of Rs 400: Motilal Oswal

Motilal Oswal is bullish on YES BANK and has recommended buy rating on the stock with a target of Rs 400 in its January 25, 2012 research report.

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Motilal Oswal is bullish on YES BANK and has recommended buy rating on the stock with a target of Rs 400 in its January 25, 2012 research report.

"Yes Bank's (YES) 3QFY12 PAT grew 33% YoY to ~INR2.5b (v/s our estimate of INR2.4b). While operating income was in line with our estimate, lower provisions led to higher than est. PAT. Provisions were lower due to strong performance on asset quality. In percentage terms, GNPA and NNPA were flat QoQ at 20bp and 4bp, respectively. Loans grew ~15% YoY (+ 5% QoQ) to INR359b. While YoY loan growth has been moderate, increased investment in credit substitutes led to strong customer asset growth of 28% YoY and 7% QoQ to INR437b. Investments grew 22% QoQ and 71% YoY to INR261b."

"CASA traction was impressive (+22% QoQ and 46%YoY), led by strong growth in CA (+18% QoQ and 37% YoY) and SA deposits (+40% QoQ and 99% YoY). CASA ratio improved 160bp QoQ to 12.6%. While yield on loans increased 20bp QoQ to 12.4%, the cost of funds increased 30bp QoQ (8.9%), leading to pressure on margins. Fee income growth moderated (flat QoQ, up 31% YoY) to INR2.1b. While growth in fees from transaction banking remained healthy at ~5% QoQ (+28% YoY), income from financial advisory declined 18% QoQ (+51% YoY) to INR806m."

"We expect EPS CAGR of ~25% over FY11-13 (without assuming a dilution), on the back of 45% EPS CAGR over FY08-11. We estimate EPS at INR28 for FY12 and at INR33 for FY13. BV will be INR133 in FY12 and INR161 in FY13. We expect RoA of 1.3%+ and RoE of 22%+. Maintain Buy," says Motilal Oswal research report.  

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