Accumulate Yes Bank; target of Rs 255: Arihant Capital

Arihant Capital's research report on Yes Bank

Yes Bank Q3FY19 performance was broadly mixed. Its profit for the quarter de-grew by 7% YoY at Rs. 1002 cr, impacted by lower non-interest income and accelerated provisioning made on account of IL&FS. Advances of the bank sharply jumped by 42% YoY at Rs. 243,885 cr, leading to higher NII growth of 41% to Rs. at 2,666 cr whereas margins for the quarter stood stable QoQ at 3.3%. Other income of the bank fell by 37.4% at Rs. 891 crpredominantly on account of loss in its treasury portfolio and lower corporate banking fees. OPEX for the the quarter grew by 20% YoY at Rs. 1567 cr, resulting into increase in its cost-income Ratio which is 44% vs 39.5% YoY. Operating profit for the quarter stood at Rs. 1990 cr, registering de-growth of 1% over corresponding quarter of previous year.

Outlook

At CMP of Rs220, the stock is trading at P/ABV(x) of 1.5x its FY20E ABV. We have an ‘Accumulate’ rating on stock.