I think that we have got a fairly decent set of numbers; PAT at Rs 802 crore with the gross NPA standing at 0.83% versus 0.79%. how would you look at the report card of Yes Bank?
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So that is fine I think. I think PAT numbers are very encouraging apart from the fact that Q2 had seen a significant growth in provisions for Yes Bank, around Rs 200 crore odd were there in Q1. In Q2, provisions at Rs 162 crore is definitely a positive number. PAT numbers are ahead of our expectations as are the net interest income numbers. Asset quality seems to be largely in line.
See the development on CASA front has been better than expectation of most of the analysts on the street. Even in this quarter, we have reached around 30% which is much better than 29.6% seen in the last quarter in Q1. This is a very, very positive development and if they are able to reach 40% by next nine quarters, it will be a pleasant surprise. But given the pace at which management has been performing, they will be able to achieve.
This quarter has already been a positive for them because almost all the players saw benefits on lower cost of funds and I believe the other players are also going to report benefits on that on a lower cost of funds side but going forward what happens is that with an increased percentage of retail lending and retail borrowing side which is considerably better yielding product than the existing book. I believe that will be the next target and milestone for investors to look at and it looks to be achievable.
You pointed out how it has been a fairly steady quarter for Yes Bank, more importantly that they have kept a tight leash on maintaining asset quality. What does that do for the stock price because Yes Bank has been one of the outperformers. It has made money for investors. They are looking at a QIP very much over the course of the next six months, raising debt of about Rs 10,000 crore at that but for a stock which is either ways expensive at 2.5 times forward price to book, where does the price go from here?
You would have to appreciate the fact that at this point of time. the overhang of failed QIP issue is there. So how they are going to pan out will be interesting. We believe that it will be in the positive direction but it will be range bound for the time being. But the valuations do not look to be extremely stretched, yes there are limited upsides but there are upsides in our view.
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