Buy Yes Bank ;target of Rs 980:Edelweiss

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26 Aug, 2025 12:21

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Edelweiss research report on Yes BankYes Bank extended its good run in Q2FY16 with PAT surging 27% YoY/11% QoQ to INR6bn (in line with estimate). The quarter was characterised by healthy NII growth (up 29% YoY) on superior NIMs (stable at 3.3%) and sustained loan growth (up >29% YoY, albeit at lower base). Other highlights: 1) slippages were controlled (at INR1.5bn), which along with negligible restructuring fed into lower incremental stress of INR~1.5bn (~INR2.6bn in Q1FY6). Further, the bank still holds forth vis‐a‐vis peers in terms of stressed assets (GNPLs + restructured + SRs) at < 1.6%; 2) fee income was softer (up 22% versus 29% run rate over past 4 quarters), however retail fees is progressing well; and 3) efforts to build its retail architecture have started reaping benefits apparent in: a) strengthening liability (CASA + retail TD), which stood at > 52% (42% a year ago) with CASA crossing 25% mark; and b) granularity in loans (corporate proportion down to 68.2% versus 71.4% a year ago); 4) however, network expansion has also resulted in higher opex growth (at 30%). Meanwhile, the bank’s disclosure has improved considerably, which we believe will go a long way in addressing concerns around exposure quality. Adequate capital to fuel growth and beef up its business model will reduce the perceived volatility and aid further re‐rating of the stock. Maintain 'BUY'. Yes Bank extended its good run in Q2FY16 with PAT surging 27% YoY/11% QoQ to INR6bn (in line with estimate). The quarter was characterised by healthy NII growth (up 29% YoY) on superior NIMs (stable at 3.3%) and sustained loan growth (up >29% YoY, albeit at lower base). Other highlights: 1) slippages were controlled (at INR1.5bn), which along with negligible restructuring fed into lower incremental stress of INR~1.5bn (~INR2.6bn in Q1FY6). Further, the bank still holds forth vis‐a‐vis peers in terms of stressed assets (GNPLs + restructured + SRs) at < 1.6%; 2) fee income was softer (up 22% versus 29% run rate over past 4 quarters), however retail fees is progressing well; and 3) efforts to build its retail architecture have started reaping benefits apparent in: a) strengthening liability (CASA + retail TD), which stood at > 52% (42% a year ago) with CASA crossing 25% mark; and b) granularity in loans (corporate proportion down to 68.2% versus 71.4% a year ago); 4) however, network expansion has also resulted in higher opex growth (at 30%). Meanwhile, the bank’s disclosure has improved considerably, which we believe will go a long way in addressing concerns around exposure quality. Adequate capital to fuel growth and beef up its business model will reduce the perceived volatility and aid further re‐rating of the stock. Maintain 'BUY'.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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