Hold Yes Bank; target of Rs 455: Nirmal Bang

Nirmal Bang has recommended hold rating on Yes Bank with a target of Rs 455, in its October 23, 2012 research report.

“Yes Bank results were above expectations and the bank reported PAT of Rs.306.1 cr in Q2FY13 resulting in a growth of 30.2% on a YoY basis and 5.5% on QoQ basis. The bank has been able to demonstrate a commendable performance on all fronts like net interest income, non interest income, asset quality and overall profitability. Such a strong performance indicates that the bank is on the course to achieve all its stated goals.”

“Going forward, as Yes Bank is largely dependent on wholesale borrowing; it is likely to gain significantly from lower interest rates and improving liquidity. These factors will act as the key levers for improvement in margins going forward. Moreover, the management is targeting healthy growth rate of around 30-35% in its overall customer assets. The tremendous improvement in CASA in the last one year has been very encouraging and FY13E target to reach 20% seems achievable. Driven by the strong performance, we expect the bank’s profitability to grow at 24.9% CAGR over FY12-FY14E. At CMP, the stock is trading at a PE of 11.45x and 9.24x of FY13E and FY14E EPS and at an adjusted P/BV of 2.48x and 2.03x FY13E and FY14E Adj BV. We have rolled over our estimates to FY14E and arrive at a target price of Rs 455 (2.3x FY14E ABV) indicating potential upside of 14.0% from current levels. We continue to maintain our HOLD rating on the stock,” says Nirmal Bang research reports.  

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