Home NewsStock Market News yes bank share price: Yes Bank pulls off strong Q1 show; should you buy the beleaguered lender now?

yes bank share price: Yes Bank pulls off strong Q1 show; should you buy the beleaguered lender now?

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yes bank share price: Yes Bank pulls off strong Q1 show; should you buy the beleaguered lender now?


Despite a better-than-expected performance in the June 2022 quarter, brokerage firms are not upbeat on the beleaguered lender .

On Saturday, the private sector lender reported a 50.17 per cent year-on-year (YoY) rise in profit after tax (PAT) at Rs 310.63 crore compared with Rs 206.84 crore in the same quarter last year.

Net interest income (NII) for the quarter jumped 32 per cent YoY to Rs 1,850 crore, the private lender said in a BSE filing. Net Interest Margin (NIM) for the quarter came in at 2.4 per cent, up nearly 30 basis points YoY .

The bank said its non-interest income for the quarter came in at Rs 781 crore. Adjusted for unrealised and realised gain on investments, the non-interest income climbed 35 per cent on a year-on-year basis.

Despite the strong show in numbers, shares of Yes Bank plunged about 7 per cent to Rs 13.9 on Monday, before trading at Rs 14.15 at 12 noon. The scrip had settled at Rs 14.71 on Friday.

Majority of the brokerages are neutral to negative on the lender, having target prices equal or below its previous close, hinting towards an up to 15 per cent slide in the counter.

“Yes Bank posted a strong outperformance with outclassing our net profit estimate of Rs 170 crore,” said . “This is attributable to lower credit cost and resilient NIM.” Credit cost declined to 38 basis points from 67 basis points on QoQ basis.

Pre-provision operating profit (PPOP) remains weak, down 24 per cent QoQ and 20 per cent YoY as opex growth of 6 per cent on a sequential level, is way higher than income, which dipped 3 per cent QoQ, it added.

“We are increasing FY23 and FY24 estimated EPS by 40 per cent and 17 per cent, respectively, building in higher NIM and lower provisions. We anticipate slower CASA amid rising rates,” it added with a ‘reduce’ rating on the counter but upgraded its target price to Rs 12 from Rs 11.

On the other hand,

sees earnings momentum primarily flowed from core business stabilisation with contained slippages, lower credit cost, moderated net labelled exposure; growth loanbook; and capped treasury losses.

“We remain cognisant of risks arising from delay in resolution of the stress pool, modest RoE profile during transition and supply overhang post the expiry of lockin shares,” said ICICI Securities, maintaining its hold rating on the stock with target price of Rs 14.7 on the counter.

Yes Bank has signed a binding term-sheet with JC Flowers ARC for strategic partnership in relation to sale of identified stressed loans aggregating to nearly Rs 48,000 crore.

Of the identified stress pool, Rs 15,000 crore is already written-off and the balance is in gross performing loans or non-performing investments.

An incremental trigger will be in complete transfer of bulk of the bank’s stress pool to ARC to enable higher focus on the core business, suggests the market experts.

Management expects GNPAs to reduce by Rs 26,000 crore and net NPAs by Rs 8,300 crore as and when the deal is executed, anticipated by Q3FY23, the experts add.

“The ARC transaction is expected to help reduce on-balance sheet stress and enable the bank to focus its management efforts on business growth. The bank is confident of delivering 15 per cent credit growth in FY23,” said Nirmal Bang Institutional Equities.

The brokerage noted that loan mix improved and NIM continued to recover, it added. However, the brokerage has a sell tag on the stock with a target price of Rs 13.4. “We find medium-term ROA targets unattractive given the investable opportunities available with larger banks.”

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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