Accumulate Yes Bank; target of Rs 409: KR Choksey

KR Choksey's research report on Yes Bank

Advances at INR 2035 bn grew by 54% yoy/19% qoq on back of strong traction in retail as well as corporate. Retail grew by 52.9% yoy while corporate grew by 54.3% yoy. Deposits at INR 2007 bn grew by 41% yoy/17% qoq. CASA growth was in line with the overall deposits growth. CA grew at a higher rate by 51% yoy/28% qoq while SA deposits grew by 35% yoy/4% qoq. CASA ratio stood at 36.5% (-150 bps qoq/+10 bps yoy). The management continues to target 40% CASA by FY20 on back of higher savings rate (6% vs. average 3.5% offered by other banks).

Outlook
We expect credit costs to decline as quality of credit underwriting improves. The bank is also expected to raise equity capital worth $1 bn by end of FY19/beginning of FY20. We assign a multiple of 3.2x to FY19E ABVPS of INR 127.8 per share, valuing the stock at INR 409 per share. We recommend ACCUMULATE.

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