Buy Yes Bank; target of Rs 453: Edelweiss

Edelweiss' research report on Yes Bank

Yes Bank posted yet another stellar performance with Q4FY18 PAT surging 29% YoY to INR11.8bn. The quarter was marked by: a) robust & broad-based loan momentum (up >50% YoY), with RWA/Asset improving to 81.7% (86.6% in FY17), a credible show. Capital consumption looked optically higher (CET-1 dipped by 100bps), but was largely on higher growth; b) GNPLs traced back to sub-1.3% levels on controlled slippages (<1% run-rate) and sale to ARCs. Credit cost was restricted to 13bps (76bps for FY18); & c) swift move towards retailisation (CASA at >36%, retail/business banking up >50% & retail fees up >19% QoQ) sustained.

Outlook

We maintain our thesis that amidst noise on asset quality, bank’s strengths — loan underwriting & structuring and long-term business momentum (retailisation)— will aid it clock best-in-class return ratios. Maintain ‘BUY’ with TP of INR453.