Buy Yes Bank; target of Rs 270: Motilal Oswal

Motilal Oswal's research report on Yes Bank

Yes Bank's (YES) PAT declined 7% YoY to INR10.0b in 3QFY19, as lower corporate banking fees and treasury losses of INR1.6b led to a 37% YoY decline in other income. NII grew 41% YoY to INR26.7b (in-line), driven by strong retail loan growth (+83% YoY) and stable margins (at 3.3%). For 9MFY19, the bank's PAT stood at INR32.3b.

Outlook

The FY18 divergence report and the delivery on asset quality/credit cost guidance remain the key near-term monitorables. We cut our PAT estimates by ~9%/12% for FY19/20. Maintain Buy with a TP of INR270 (1.8x Sep'20E ABV).