Accumulate Yes Bank; target of Rs 1476: Arihant Capital

Arihant Capital's research report on Yes Bank

Total Advances grew by 38% to Rs 1,10,216 crore as at Q2 FY17. Corporate banking accounted for 67.9% of the Advances portfolio while Retail & Business Banking constituted 32.1% rising from 31.8% YoY backed by improved share in MSE and consumer banking. Total Deposits grew by 29% to Rs 1,28,024 crore. The CASA deposits grew by 53% y-o-y to Rs 38,784 crore taking the CASA ratio to 30.3% up from 25.5% in the corresponding quarter backed by strong growth of savings account deposits which grew by 53.6% Y-o-Y. The Bank’s C-D ratio stood at 86.1%, Aided by strong growth in advances and deposits, NII jumped by 30% to Rs 1446 crore and non-interest income increased by 44% and stood at Rs 888 crs. Net profit for the bank grew by 31% Y-o-Y to Rs 802 crores.

Bank reported another strong quarter with strong growth and steady asset quality. The momentum should continue as the bank focuses to reduce its corporate advance mix to 55% in next few years as well as raising capital via QIP will stay a trigger. We have valued bank at 3.25(x) its FY18E adj. book value and have arrived at fair value of Rs 1,476 per share. At CMP of Rs 1,308, the stock is trading at P/ABV(x) of 2.9x its FY18 ABV. We have Accumulate rating on stock.