Buy Yes bank; target of Rs 359: SPA Securities

SPA Securities's report on Yes bank

Yes bank reported strong momentum on most of the metrics in P&L with 35% y-o-y loan book growth driving 30% y-o-y NII growth, 35% y-o-y other income growth and 34% y-o-y PPOP growth. Credit cost spiked 1.8 x y-o-y resulting in to 25% y-oy growth in PAT to INR 10bn. However, on the balance sheet front, it was a disappointment as there was high divergence on loan classification pertaining to FY17.

Outlook

However, its ability to do the same at such a short notice is something useful to understand. We increase our cautiousness on the bank’s asset quality and lower our valuation multiple from 3.4x to 3.0x FY19E P/Adj. BV and recommend a BUY on the stock with a TP of INR 359 in 18 months.