Sell Yes Bank; target of Rs 9: Emkay Global Financial

Emkay Global Financial is bearish on Yes Bank has recommended sell rating on the stock with a target price of Rs 9 in its research report dated October 23, 2020.

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October 27, 2020 / 12:51 IST

26 Aug, 2025 12:21

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Emkay Global Financial's report on Yes Bank

Yes Bank has sustained profitability for a second quarter in a row with net profit at Rs1.3bn (vs. an estimated loss of Rs3.4bn), led by high margins and contained provisions. The GNPA ratio remained elevated but largely stable at 16.9%, benefiting from SC stay on NPA tagging. The downtrend in credit/deposits has been largely arrested. After a sharp run-down for the last one year, deposits grew 16% qoq, led by corporate/bulk deposits, but building a retail deposit base will be an arduous task. The bank has paid back RBI liquidity support of Rs500bn. The bank has Rs24bn in unrecognised NPAs (1.4% of loans) due to SC stay and SMA pool (+30 DPD) at Rs67bn (4% of loans). Covid-19-related cumulative contingent provisions stand at Rs19bn (1.2% of loans) but should be shored up as asset quality risk persists.

Outlook

RBI initiated bailout backed by large banks and recent capital raising from market reduced survival risk considerably but it will have to manoeuvre through Covid-19-led asset quality disruption and win stakeholders’ trust. Retain Sell with a TP of Rs9, given sub-par return ratios and unfavourable risk-reward with higher valuations than peers.

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