Buy Yes Bank; target of Rs 382: Motilal Oswal

Motilal Oswal's research report on Yes Bank

Yes Bank (YES) reported robust PPoP growth of 38% YoY/12% QoQ to INR 19.1b (10% beat), led by strong 34% YoY growth in total revenues and controlled opex. However, asset quality deteriorated sharply, adversely impacted by high divergence of INR 63.55b, and thus, resulted in 56% YoY increase in provisions. PAT, however, still grew at a healthy 25% YoY to INR 10.02b (largely in-line).

Outlook

The RBI giving its approval on the upgradation of divergent accounts will further cement confidence. Total net stressed assets now stand at 2.5% of advances and equates to half yearly operating profit. We estimate YES to deliver industry leading growth, with 25% earnings CAGR over FY17-20E. We revise our PT to INR 380 (2.7x Sep-19E ABV). Maintain Buy.