Siddharth Sedani
Strong traction in Yes Bank’s balance sheet continues. Asset quality as one of the best in the industry among corporate lenders persists. The credit book increased 54 percent YoY, driven equally by its corporate and commercial books. We believe the growth momentum would persist.
Deposits rose 40.5 percent YoY with strong traction in CASA deposits. We expect its retail-deposit franchise and granularity in deposits to further improve.
The GNPA ratio improved to 1.28 percent (down 24bps YoY, 44bps QoQ). We expect the bank to maintain stable asset quality over FY19-20.
With 18.4 percent capital adequacy (tier-1 13.2 percent), the bank is well capitalised for 30 percent loan growth over FY’19-20. Our April 2019 target of Rs 407 is based on the two-stage dividend discount model. This implies a 2.7x P/ABV multiple on its FY20e book.
Disclaimer: The author is Vice President - Equity Advisory, Anand Rathi Shares and Stock Brokers. The views and investment tips expressed by investment experts/broking houses/rating agencies on Moneycontrol are their own, and not that of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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