Buy Yes Bank; target Rs 453: Angel Broking
Angel Broking is bullish on Yes Bank and has recommended buy rating on the stock with a target price of Rs 453 in its July 25, 2012 research report.
July 28, 2012 / 16:19 IST
Angel Broking is bullish on Yes Bank and has recommended buy rating on the stock with a target price of Rs 453 in its July 25, 2012 research report.
"Yes Bank reported a strong performance for 1QFY2013. The bank’s net profit grew by 34.3% yoy to Rs 290cr, higher than our estimates due to stronger growth in non-interest income than estimated by us. Strong momentum in savings account deposits and maintenance of healthy asset quality were the key positive takeaways from the results.""Total Advances grew by 16.4% yoy, while deposits increased by 15.2% yoy. Customer Assets (Loans & Credit Substitutes) grew by 32.4% yoy. Current and Savings Account (CASA) deposits grew by 71.5% yoy to taking the CASA ratio to 16.3% as of 1QFY2013 up from 10.9% as of 1QFY2012 (15.0% in 4QFY2012). Savings account deposits rose by 20.0% qoq, while increased by more than 4.5 times on a yoy basis. The significant traction in savings account deposits helped the bank maintain its cost of funds sequentially at 9.0%. During 1QFY2013, the bank’s non-interest income grew strongly by 74.3% yoy to Rs 288cr on account of strong growth in all fee income streams. The income from financial markets rose by nearly 4 times on a yoy basis to Rs 95cr primarily due to treasury related gains. The bank maintained its strong asset-quality profile during the quarter as well, with gross NPA ratio and the net NPA ratio remaining stable at marginal 0.3% (0.2% in 4QFY2012) and 0.06% (0.05% in 4QFY2012), respectively.""The Bank has taken challenges of building a retail deposit base head-on, nearly doubling its branch network over the past 18 months to 381 branches and aggressively increasing savings rate to 7% as a smart customer-acquisition strategy. In our view, the bank is in a sweet spot, wherein retail franchise growth is likely to remain strong as large banks cede some market share to it rather than offering higher savings rates to their entire customer base. Even with retail growth prospects being stronger now, valuations at 1.8x FY2014E ABV are still cheaper than peers such as IndusInd Bank (2.3x FY2014 ABV) as well as its own historical median (2.5x over FY2007-FY2012), providing a favorable risk-return trade-off in our view. Hence, we recommend Buy on the stock with a target price of Rs 453" says Angel Broking research report.Shares held by Mutual Funds/UTI Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.To read the full report click on the attachment 
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