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  1. Earnings, stock split lift Yes Bank shares to all-time high; Goldman, JP Morgan, CLSA recommend ‘buy’

Earnings, stock split lift Yes Bank shares to all-time high; Goldman, JP Morgan, CLSA recommend ‘buy’

Yes Bank shares have risen as much as 5% in the morning trade after the private sector lender yesterday reported a 32% rise in net profit for the April-June quarter. The board also decided to split the stock in 1:5 ratio which also fuelled up buying in the shares.

By: | Updated: July 27, 2017 2:50 PM
Shares of Yes Bank have surged nearly 13% to hit an all-time high of Rs 1,797 in just two days of trading and has added nearly Rs 9,500 to the market capitalisation of the bank. (Image: Reuters)

Yes Bank shares have risen as much as 5% in the morning trade after the private sector lender yesterday reported a 32% rise in net profit for the April-June quarter. The board also decided to split the stock in 1:5 ratio which also fuelled up buying in the shares.  Yes Bank stands firm at the sixth position according to the market cap of Rs 82230.72 behind the industry heavyweights HDFC Bank, ICICI Bank and other major private lenders Kotak Mahindra Bank, Axis Bank and IndusInd Bank in the domestic private banking market players.

Stock split:

The Board of Directors at the meeting held yesterday approved a subdivision of the equity shares of Yes Bank in 1:5 ratio which uplifted the investors’ sentiments resulted in record share activity since 21 May. “The board has considered and approved the sub-division of existing 1 equity share of face value of Rs 10 each fully paid up into 5 equity shares of Rs 2 each fully paid up,” Yes bank said in an Exchange filing.

Earnings booster:

Yes Bank’s net profit zoomed 32% to Rs 965.52 crore for the first quarter ended June of the financial year 2018 compared to Rs 731.80 crore year ago in the same period. While the total income of the bank jumped 21% to Rs 5,785.96 crore in the April-June quarter, from Rs 4,762.83 crore in the same period of 2016-17.

Brokerage radar:

The leading research and brokerage houses have raised their target prices on the Yes Bank stock after the results. Goldman Sachs maintained ‘buy’ with a target price of Rs 1,875 per equity share on strong growth with improving quality. JP Morgan also maintained ‘overweight’ and has raised the target price to Rs 2,000 from Rs 1,875 per equity share as the brokerage firm sees loan growth and CASA momentum to continue strongly.

Brokerage and research firm CLSA maintained ‘buy’ and raised the target price to Rs 2070 from Rs 1,920 per equity share on good earnings and see 26% CAGR in profits led by healthy topline and stable credit costs. Another brokerage firm Nomura has raised the target price to Rs 2,200 from Rs 1,800 per equity share on strong results and increased confidence in asset quality and operationally strong performance of Yes Bank.

Share performance:

Shares of Yes Bank have surged nearly 13% to hit an all-time high of Rs 1,797 in just two days of trading and has added nearly Rs 9,500 to the market capitalisation of the bank. While today the stock has surged 5% to Rs 1,797 and over 8.54 million shares have changed hands till the afternoon trade which is highest after yesterday’s 8.5 million since 12 May 2017. The stock of Yes Bank has gained nearly 27% from over the last 30 days while it has returned over 57% since January of this calendar year.

Asset quality:

Gross non-performing assets (NPAs) of the bank rose to 0.97% of gross advances as on June 30, 2017, against 0.79% as of June 30, 2016. While the net NPAs were up marginally at 0.39 % of the net advances on June 30, 2017, from 0.29% at the end of the first quarter of 2016-17.

Better Margins:

Yes Bank’s net interest income grew 44% to Rs 1,808.90 crore in the first quarter, driven by growth in advances and current account & savings accounts (CASA) deposits and steady expansion in net interest margin (NIM). NIM, a key parameter which indicates the profitability of a bank, expanded to 3.7% for the fiscal 2018 first quarter from 3.6% in preceding quarter March 2017.

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