Global brokerages Deutsche Bank and Nomura reiterated their bullishness on shares of Yes Bank, after India’s fifth-largest private sector lender reported stellar Q3 results. Notably, Yes Bank reported a rise of 22% in the third-quarter net profit to Rs 1,076.9 crore on a yearly basis, and a sequential rise of 7.4%.
Taking stock of the company’s earnings, Nomura said that the Asset Quality was relatively stable in Q3. On the NPAs (non-performing assets) front, Yes Bank gross NPAs came down to 1.72% for the quarter ended 31 December 2017 from 1.82% of the total loans and advances as at the end of 30 September 2017. Nomura noted that there were no slippages from a large pool of upgrades done in Q2.
Nomura has increased the target price on the shares to Rs 375. The bank’s shares were trading at Rs 344.8, up by more than 1% on NSE this morning. The global brokerage firm’s target price implies an upside of more than 8.5% from the current market prices. Nomura says that Q4 slippages would be key, as Yes Bank will want to avoid any huge divergences.
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Meanwhile, Deutsche Bank has raised the target price on the shares of Yes Bank to Rs 400, implying an upside of more than 15% from the current market prices. Deutsche Bank notes that NIM drop is a bit discomforting.
Commenting on the results and financial performance, Mr. Rana Kapoor, Managing Director & CEO, Yes bank said, “YES Bank has delivered another quarter of satisfactory performance with sustained earnings delivery and accelerated growth momentum with the Bank achieving a Balance Sheet size beyond Rs 2.5 Lakh Crores and Advances Book in excess of Rs 1.7 Lakh Crores. Granularity in the Balance-sheet continues to improve with Retail Banking Advances more than doubling in a year to 11.8% of outstanding book and CASA Ratio of 38.0%. YES Bank’s Asset Quality continues to demonstrate resilience with Stable Asset quality parameters that includes meaningful repayments from accounts previously observed under RBI RBS review for FY17.”
The total income for the third-quarter ended 31 December 2017 rose 32.1% to Rs 3,311.1 crore as compared to Rs 2,505.8 in the corresponding period a year ago. Yes Bank’s operating profit jumped 37.7% to Rs 2,001.8 crore in the third quarter for the current fiscal from Rs 1,453.8 crore in the October-December quarter of the financial year 2016-2017 while the provisioning for the October-December period came at Rs 421.3 crore, up by 265.1% on a yearly basis. EPS (earnings per share) rose to Rs 4.7 per equity share in the Oct-Dec quarter from Rs 4.2 in the year-ago quarter.