Buy Yes Bank; target of Rs 400: Axis Direct

Axis Direct's research report on Yes Bank

Yes Bank’s (YES) Q3FY18 PAT grew by 22% YoY at Rs 10.8 bn, which was in line with our estimate. Asset quality improved, as slippages were lower at Rs 4.9 bn which drove 10 bps QoQ decline in GNPA ratio to 1.7%. Coverage ratio increased to 46% vs. 43% in Q2 and management intends to scale it up to 60% by Jun’18. Loan growth was strong at 46% YoY on robust corporate loan growth (44% YoY) coupled with strong growth in retail/MSME loans (52% YoY).

Outlook

We retain BUY rating, as core operating performance remains strong and YES continues to gain market share along with better retail penetration and strong capitalization. At CMP, YES trades at 2.7x/2.3x FY19E/FY20E ABV. TP at Rs 400 revised from Rs 365 earlier on rollover. For all recommendations report, click here

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