We estimate sharp improvement in RoA to 1.0% by FY26 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,” said Jai Prakash Mundhra, analyst at ICICI Securities.The bank has strengthened its balance sheet (liability, loan mix, CET 1, LDR, LCR, etc.)
It has a healthy liability franchise with stable CASA, comfortable (85-86%) LDR and LCR (116%).
Advances mix has decisively moved towards retail and SME (share at 62%).
These do not represent the views of Economic Times)
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While praising the commendable turnaround seen in YES Bank ’s March quarter earnings, domestic brokerage firm ICICI Securities has retained its ‘sell’ rating on the private bank with a target price of Rs 20 saying that the valuations remain unattractive.“The bank is making concerted efforts in organic PSL origination, which should ease incremental RIDF burden, aiding yield and RoA trajectory. We estimate sharp improvement in RoA to 1.0% by FY26 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,” said Jai Prakash Mundhra, analyst at ICICI Securities.The bank has strengthened its balance sheet (liability, loan mix, CET 1, LDR, LCR, etc.) though profitability remains burdened by an unproductive bulky rural infrastructure development fund (RIDF).YES Bank’s loan growth was healthy at 5% QoQ but deposits growth was strong at 10% with marginal rise in CASA share QoQ and importantly, stock of net NPA and net SR improved sharply to 1.1% vs 1.7% QoQ and 2.4% YoY.The bank guides for continued strong recovery / upgrades and expects net carrying value of SR to be nil by FY25 while delivering <0.5% credit cost (on average assets).Under the current management, the bank has staged a strong turnaround despite a difficult backdrop. It has a healthy liability franchise with stable CASA, comfortable (85-86%) LDR and LCR (116%). Advances mix has decisively moved towards retail and SME (share at 62%). Asset quality, too, has turned comfortable with net NPA and net carrying security receipts at 1.1%.YES Bank shares fell 3.5% on Tuesday and closed at Rs 26.17 on the BSE.Also read: Kotak Equities initiates coverage on Mamaearth, cites 3 key differentiators (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
