Yes Bank (YES) has reported in-line Q4FY24 PAT of INR 4.5bn, with RoA rising to 0.5%. Loan growth was healthy at 5% QoQ but deposits growth was strong at 10% QoQ. Stock of net NPA and net SR improved sharply to 1.1% vs 1.7% QoQ and 2.4% YoY. The bank has strengthened balance sheet (liability, loan mix, CET 1, LDR, LCR, etc.) though profitability remains burdened by unproductive bulky RIDF (~11% of assets). The bank is making concerted efforts in organic PSL origination, which should ease incremental RIDF burden, aiding yield and RoA trajectory.
OutlookWe estimate sharp improvement in RoA to ~1.0% by FY26E vs FY24 RoA of 0.3%, led by improving NIM trajectory and benign credit costs. Valuation, however, remains unattractive with the stock trading at ~1.9/1.8/1.6x FY24/25E/26E ABV. Retain SELL with a revised TP of INR 20, valuing the stock at ~1.2x FY26E ABV.
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