NEW DELHI: Most brokerages gave YES Bank their vote as the private lender put up a good show on the profit front.
It reported a 30.5 per cent rise in net profit at Rs 1,260.36 crore for the first quarter ended June on the back of higher income.The bank had reported a net profit of Rs 965.52 crore in the same quarter of last fiscal.Total income jumped to Rs 8,272.18 crore in April-June, up 42.96 per cent, from Rs 5,785.96 crore in the same quarter of 2017-18.However, provisions for bad loans and contingencies more than doubled to Rs 625.65 crore in the June quarter, from Rs 285.78 crore in the year-ago period.The increase in provisions was on account of rise in gross non-performing assets (NPAs) to 1.31 per cent of advances as on June 30, 2018, against 0.97 per cent a year before.
The stock was nearly 1 per cent down at Rs 366.30 while the BSE Sensex was up 0.89 per cent at 37,314 at around 10.30 am.Brokerage firms, including Investec Securities, CLSA, Nomura, Citi, Motilal Oswal, Emkay, Prabhudas Lilladher and Anand Rathi, maintained their Buy on YES Bank with a target price of Rs 500, Rs 450, Rs 500, Rs 440, Rs 444, Rs 366, Rs 438 and Rs 426, respectively.Anand Rathi in a report said, Strong momentum in YES Banks balance sheet continues.
The strong headwinds of rising costs squeeze net interest margins.
Asset quality, as one of the best among corporate lenders, persists.
The RoE is inching toward 20 per cent.
We maintain our Buy recommendation.According to YES Securities, YES Bank is trading at attractive valuations (2.1x FY20E P/B), given strong growth and high return ratios (RoA of 1.55 per cent).
We reiterate Buy recommendation on the stock and see multiple levers for re-rating - (a) CEO reappointment (August 2018) (b) improving NIMs (Q3 2019) and (c) clean chit from RBI divergence report (October 2019).
At CET1 of 9.5 per cent, capital adequacy remains a key risk, it added.