Buy Yes Bank; target of Rs 2142: SPA Research

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SPA Research's report on Yes Bank

Yes Bank reported good set of numbers with NII growth of 44% y-o-y on the back of improved C/D ratio (+674bps y-o-y) and higher other income resulting in 32% y-o-y growth in PAT. NIMs improved by 10bps y-o-y to 3.70% due to better spreads, higher loan book growth of 32.1% y-o-y and an improved CASA ratio. GNPA / NNPA / PCR stood at 0.97% / 0.39% / 60% respectively for the quarter. We expect return ratios to remain stable at ~18% for FY19E despite branch additions and asset quality to remain a key monitorable for the bank which is focused on corporate loan book in a weak macro environment.

Outlook

We recommend a BUY on the stock with a TP of INR 2,142 in 18 months, implying a multiple of 3.4x P/ Adj. BV on FY19E BV.

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