Buy Yes Bank; target of Rs 550: Angel Broking

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26 Aug, 2025 12:21

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Angel Broking`s research report on Yes Bank

“Yes Bank reported a healthy operating performance for 4QFY2014, though ahead of street’s but in line with our expectations. The key highlights from the results are a) continued moderation in balance sheet growth, which led to a moderate NII growth of 12.8 percent yoy, b) improvement in margins by 10bp qoq to 3.0 percent c) healthy performance on non-interest income front and d) largely stable asset quality.”

“During the quarter, the loan book and customer assets book (loans & credit substitutes) both continued to grow at a healthy pace of 18.4 percent and 15.4 percent yoy respectively. Deposits for the bank grew at a moderate pace of 10.8 percent yoy. Savings deposits continued to witness robust traction and grew by 54.9 percent yoy. CASA deposits grew by 28.8 percent yoy, thereby taking the CASA ratio to 22.0 percent as of 4QFY2014, up from 20.9 percent as of 3QFY2014 and 18.9 percent as of 4QFY2013. NIMs for the bank increased sequentially by 10bp to 3.0 percent, aided by a 20bp sequentially decline in Cost of funds to 8.4 percent during the quarter. During 4QFY2014, the bank’s non-interest income grew healthy by 17.5 percent yoy to Rs 446cr, as income from the ‘Transaction banking’ segment grew 43.7 percent yoy to Rs 134cr. Strong traction was witnessed in the ‘Retail and others’ segment, which grew by 66.3 percent yoy. The bank witnessed asset quality stability during the quarter. It sold Rs 20cr of assets to ARC, thereby taking the ARC-Security Receipts book to Rs 175cr. During the quarter, absolute gross NPAs for the bank decreased by Rs 21cr qoq to Rs 175cr, while absolute net NPAs decreased sequentially by Rs 16cr to Rs 26cr. On a relative basis, the Gross NPA ratio decreased by 8bp qoq to 0.31 percent, while the net NPA ratio decreased by 3bp qoq to 0.05 percent. The bank did not witness any restructuring during the quarter. As of 4QFY2014, standard restructured advances for the bank remained under control at Rs 101cr (0.18 percent of gross advances).”

“The Bank’s asset quality performance has been reasonable so far, with credit costs contained at 70bp for the year. Going forward the stock will be beneficiary of revival in economic environment along with increased expectations of lower interest rates in the second half of current fiscal. At CMP, the stock trades at 1.6x FY2016E ABV which is at the lower end compared to its other private peers. We recommend a Buy rating on the stock with a target price of Rs 550,” says Angel Broking research report. 

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