ICICI Direct's research report on Yes Bank
The bank fell short of its Version 2.0 (launched in 2010) targets such as 750 branches, 3000 ATMs, Rs 1.25 trillion deposit, Rs 1 trillion credit, 30% retail/SME credit & 30% CASA ratio by FY15. This was due to a slowdown in the economy. However, it still delivered a better performance vs. peers under Version 3.0. Largely, it aims to strengthen the retail presence on both the deposit (targets 60% of deposits from retail) and credit (targets 45% retail including SME) front. Historically, credit has grown at a brisk pace of 53.9% CAGR in FY08-11 to Rs 34364 crore while in FY11-16, growth was modest at 23.4% CAGR to Rs 98210 crore. Going ahead, we expect credit growth at 26% CAGR to Rs 157789 crore by FY18E.
In the past five years, the bank consistently delivered 1.5%+ RoA and 18%+ RoE. Though the asset quality has remained resilient, given the current environment, probability of higher slippages cannot be ruled out. However, healthy asset growth coupled with improving margins would support earnings ahead. We expect bank to clock 29% CAGR in PAT to Rs 4277 crore in FY16-18E. We have factored in capital raising of Rs 6500 crore in FY17E resulting in dilution of 13% and book value accretion of 20%. With an upward revision in our estimate and target multiple, we revise our TP higher to Rs 1300 (Rs 1150 earlier) valuing the stock at 2.4x FY18E ABV. The stock has seen a strong rally recently. Maintain HOLD.
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.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
