Prabhudas Lilladher recommended accumulate rating on YES Bank with a target price of Rs 245 in its research report dated January 24, 2019.
Yes Bank missed our earnings expectation, reporting PAT of Rs10.0bn (PLe: Rs11.1bn) which was mainly led by sharp drop in other income as bank started to see lower corporate fees (from slower incremental growth) and one time large MTM loss on swaps. Importantly, NII saw larger beat with much stronger growth of 41% YoY/10.0% QoQ, while provisions were relatively lower om investment write back helping support earning despite recognizing large part of IL&FS exposure. We have been re-iterating new MD & CEO appointment remains key event for the bank's journey ahead which now starts bringing in credibility back but risks of higher asset quality recognitions and RBI AQR remain immediate concern. Also, delayed capital raising could slow growth significantly and lower CASA metrics, higher corporate share restricts increase in multiple at current juncture.
Outlook
We retain ACCUMULATE rating with revised TP of Rs245 (from Rs231) based on 1.6x (from 1.5x) Sep-20 ABV.
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