Hold YES Bank; target of Rs 332: Arihant Capital

Arihant Capital's research report on YES Bank

Total Advances grew by 35% to Rs 1,48,675 crore as at Q2 FY18. Corporate banking accounted for 67.4% of the Advances portfolio while Retail & Business Banking constituted 32.6% due to increase in consumer banking and business banking. Total Deposits grew by 23.4% to Rs 1,57,990 crore. The CASA deposits grew by 51.4% Y-o-Y to Rs 58,724 crore taking up the CASA ratio to 37.2% up from 36.8% in the corresponding quarter on. Savings account deposits increased by 51.6% Y-o-Y. Current account deposits increased by 51.1% Y-o-Y.

Outlook

Bank posted increasing share of retail fees, liabilities & advances. Asset quality saw a deterioration with GNPAs & Net NPA increasing to 1.82% & 1.04% respectively. We have valued the bank at 3.2(x) its FY19E adj. book value and have arrived at fair value of Rs 332 per share. At CMP of Rs 307, the stock is trading at P/ABV(x) of 3.0x its FY19 ABV. We have ‘HOLD’ rating on stock.

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