Yes Bank share price tanked 4% on Monday to Rs 13.90 per share intraday even after the lender reported 50% increase in net profit at Rs 311 crore for the fiscal first quarter ending June 2022 on the back of the fall in provisions for bad loans, and healthy income growth, up from Rs 207 crore profit in the year-ago period. Yes Bank’s net interest income (NII) jumped 32% on-year to Rs 1,850 crore, whereas net interest margins (NIM) marginally declined to 2.4% during Q1FY23 from 2.5% in the previous quarter. So far this year, Yes Bank share price has risen 1.07%, outperforming benchmark Nifty 50 which has tumbled 5%. However, analysts remain sceptical of Yes Bank stock performance going forward. The scrip ended 3.29% down at Rs 14.24 apiece on BSE.
Stock talk: Should you buy, hold or sell Yes Bank shares?
Target price: Rs 12
According to analysts at Edelweiss Securities, Yes Bank posted a strong outperformance with PAT at Rs 310 crore, up 50% on-year, outclassing their estimate of Rs 170 crore. This is attributable to lower credit cost and resilient NIM. The brokerage increased EPS building in higher NIM and lower provisions. “Our RoA estimate changes from 0.3% to 0.6% for FY23E, but is still lower than guidance of 0.75% as we are less upbeat on CASA given rising rates. We believe capital-raising and the transfer to ARC are long-term positives, but would take time to play out,” they said. The brokerage maintains ‘Reduce’ rating on the stock with a target price of Rs 12 per share.
ICICI Securities: Hold
Target price: Rs 14
Analysts at ICICI Securities RoA profile of 0.5%, 0.7% for FY23, FY24 respectively. They do see a turnaround in relevant operating metrics and improved confidence in stability of the franchise. Nonetheless, they remain cognisant of risks arising from delay in resolution of the stress pool, net labelled exposure of 5.0%, modest RoE profile during transition and supply overhang post the expiry of lockin shares. “An incremental trigger will be in complete transfer of bulk of the bank’s stress pool to ARC,” they said. The brokerage maintains ‘Hold’ rating on the stock with an unchanged target price of Rs 14 (assigning 1.1x FY24E ABV).
Nirmal Bang: Sell
Target price: Rs 13.4
Brokerage Nirmal Bang highlighted that the ARC transaction is expected to help reduce Yes Bank’s on-balance sheet stress and enable the lender to focus its management efforts on business growth. The bank is confident of delivering 15% credit growth in FY23, highlighted another. “Despite the overall better-than-expected results and an improving overall picture at the bank, we find medium-term ROA targets unattractive given the investable opportunities available with larger banks,” it said. Nirmal Bank maintains ‘Sell’ on Yes Bank shares with a target price of Rs 13.4.
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