Aditya Birla Money is bullish on YES BANK and has recommended buy rating on the stock with a target of Rs 345 in its October 28, 2011 research report.
“Yes Bank announced its audited results for Q2FY12. The growth in top-line as well as bottom line came above our expectations; however this was largely aided by strong non-interest income growth. Net Profit after tax for the current quarter increased 33.3% YoY mainly driven by strong non-interest income growth (63.4% YoY, 29.5% QoQ) and modest Net Interest Income growth (23.1% YoY, 8.9% QoQ). Non Interest Income was up on the back of sound growth in Transaction Banking (59.1% YoY), Financial Markets (190.2% YoY) and Financial Advisory businesses the biggest component of non-interest income (53.4% YoY).”
“Total Business of the bank grew by 11.2% YoY (2.1% QoQ) to Rs 782.7 bn. Advances grew (12.7% YoY, 3.3% QoQ) to Rs 341.9 bn, however including the credit substitutes advances grew healthy at 27.4% to Rs 407.6 bn. Going forward, the management expects loan book (excluding credit substitutes) to grow by 25.0%. Deposits on the other hand grew by 10.2% YoY (1.1% QoQ) mainly led by lower term deposit growth. CASA deposits remained stable at 11.0% ratio for the quarter. Going forward, we expect the CASA ratio to improve to 13.4% by FY12E mainly driven by deregulation of savings rate by RBI, aggressive branch expansion plans and higher CASA growth (~64.6% YoY) as compared to total deposit growth of 27.0% YoY in FY12E.”
“Considering the bank’s strategy of de-bulking its advance book coupled with expectation of credit growth moderation in the industry, we have reduced our credit growth target for the bank for FY12E from 35% to 27%. The bank is adequately capitalised currently with a CAR of 16.0% (Tier I at 9.4%). The management has indicated that the bank will tap capital market only when the market conditions are favourable. We believe, deregulation of savings rate by RBI is a huge positive for Yes Bank and it will present an opportunity for all the banks which are intending to increase its CASA to lure savers by offering exotic products and higher rates. We estimate Yes Bank to report an EPS CAGR of 25.4% over FY11-FY13E. ABV is estimated to grow at 21.9% CAGR during the same period. The stock currently trades at 2.3x FY12E ABV and 1.9x FY13E ABV. We maintain our positive view on the stock and recommend Accumulate rating with a revised price target of Rs 345.0 (Rs 355.4 earlier), implying an upside potential of 12.0%,” says Aditya Birla Money research report.
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“Yes Bank announced its audited results for Q2FY12. The growth in top-line as well as bottom line came above our expectations; however this was largely aided by strong non-interest income growth. Net Profit after tax for the current quarter increased 33.3% YoY mainly driven by strong non-interest income growth (63.4% YoY, 29.5% QoQ) and modest Net Interest Income growth (23.1% YoY, 8.9% QoQ). Non Interest Income was up on the back of sound growth in Transaction Banking (59.1% YoY), Financial Markets (190.2% YoY) and Financial Advisory businesses the biggest component of non-interest income (53.4% YoY).”
“Total Business of the bank grew by 11.2% YoY (2.1% QoQ) to Rs 782.7 bn. Advances grew (12.7% YoY, 3.3% QoQ) to Rs 341.9 bn, however including the credit substitutes advances grew healthy at 27.4% to Rs 407.6 bn. Going forward, the management expects loan book (excluding credit substitutes) to grow by 25.0%. Deposits on the other hand grew by 10.2% YoY (1.1% QoQ) mainly led by lower term deposit growth. CASA deposits remained stable at 11.0% ratio for the quarter. Going forward, we expect the CASA ratio to improve to 13.4% by FY12E mainly driven by deregulation of savings rate by RBI, aggressive branch expansion plans and higher CASA growth (~64.6% YoY) as compared to total deposit growth of 27.0% YoY in FY12E.”
“Considering the bank’s strategy of de-bulking its advance book coupled with expectation of credit growth moderation in the industry, we have reduced our credit growth target for the bank for FY12E from 35% to 27%. The bank is adequately capitalised currently with a CAR of 16.0% (Tier I at 9.4%). The management has indicated that the bank will tap capital market only when the market conditions are favourable. We believe, deregulation of savings rate by RBI is a huge positive for Yes Bank and it will present an opportunity for all the banks which are intending to increase its CASA to lure savers by offering exotic products and higher rates. We estimate Yes Bank to report an EPS CAGR of 25.4% over FY11-FY13E. ABV is estimated to grow at 21.9% CAGR during the same period. The stock currently trades at 2.3x FY12E ABV and 1.9x FY13E ABV. We maintain our positive view on the stock and recommend Accumulate rating with a revised price target of Rs 345.0 (Rs 355.4 earlier), implying an upside potential of 12.0%,” says Aditya Birla Money research report.
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