Buy Yes Bank; target of Rs 920:SPA Research

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26 Aug, 2025 12:21

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SPA Research's research report on Yes BankYes Bank reported good set of numbers with strong operational performance and stable asset quality. NII grew by 27.3% YoY to INR 11.6bn led by 26.7% growth in advances and net profit grew by 25% to INR 6.8bn due to higher provisioning. After spike in Q2FY16, increase in GNPA moderated in Q3FY16 and is expected to stabilize in Q4FY16E as Yes Bank has complied with 75% of the RBI's actionable list. PCR declined QoQ by 120bps to 66.5%. NIM improved by 20/10 bps YoY/QoQ due to cut in saving rate in Q2FY16 and higher CASA deposit. YBL has reduced its exposure to stressed sectors like power and Iron & steel to ~12% from ~14% in Q2FY16 and continue to maintain quality corporate loan book with 75% of its exposure to >A rated corporate. We maintain our BUY rating with TP of INR 920 (2.5x FY17E ABV). YBL continues to grow its loan book at above industry average bucking the overall slowdown in the economy, though the growth has moderated in last two quarters. Stabilization of Credit Substitutes QoQ also points that profitable lending opportunity is slowing down. However, any slowdown in credit growth should be offset by higher than average NIM after cut in Savings Rate in Q2FY16 and strong traction in CASA deposit and higher retail & MSME lending. YBL is targeting to improve its CASA deposit to 40% and Retail & Business Banking advances to 45% from 27% and 33% respectively. To capitalize on the growing retail footprint, YBL has intensified its focus on digital technologies and launched initiatives like Smart Box Collection Solutions, Co-branded Wallet and Virtual Card with Snapdeal/Freecharge and banking on social media through YES - PAY. We expect Yes Bank to maintain its credit growth on back of comfortable capital adequacy and aggressive fund raising to expand retail and MSME portfolio. We maintain our BUY rating with TP of INR 920 (2.5x FY17E ABV).For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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