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Yes Bank
F3Q11: In Line Numbers
What's Changed
Price Target Rs455 to Rs395
Yes Bank reported F3Q11 profits of Rs1.91 bn (+8%
QoQ, +52% YoY) – broadly in line with expectations:
On a per-share basis (given equity issuance), earnings
were up 31% YoY.
Margins compressed by 20 bps to 2.8%: This
reflected rising cost of funds, outpacing asset yield
re-pricing this quarter.
Volume growth slowed sequentially: Volume growth
slowed this quarter – loans grew by 3% QoQ / 66% YoY.
Deposits declined 1% QoQ / 79% YoY. Loan growth was
hampered by macro uncertainty and lagged customer
response given rising rates.
Core non-interest income growth rebounded:
Growth picked up from 14% YoY in QE Sep-10 to 32%
YoY, driven by strength across all segments.
Asset quality metrics were stable: Gross NPLs were
up 8% QoQ; coverage ratio at 76% was comfortably
above RBI’s requirement. Yes Bank indicated that its
exposure to the MFI sector is Rs2.93 bn (0.94% of
loans); so far, it has seen no slippages in this area.
Reducing price target to reflect estimate changes,
higher bear case probability: We are reducing our
price target from Rs455 to Rs395. We are now applying
a higher probability to our bear case scenario (20%) to
factor in increased uncertainty about economic growth
following recent developments with regard to inflation.
We have also reduced our earnings estimates slightly.
Maintain Overweight; valuations attractive: We
expect EPS growth to average 25% over the next two
years. In this context, we think that the current
valuations at 10x F2012e earnings and 1.7x BV are very
attractive.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Yes Bank
F3Q11: In Line Numbers
What's Changed
Price Target Rs455 to Rs395
Yes Bank reported F3Q11 profits of Rs1.91 bn (+8%
QoQ, +52% YoY) – broadly in line with expectations:
On a per-share basis (given equity issuance), earnings
were up 31% YoY.
Margins compressed by 20 bps to 2.8%: This
reflected rising cost of funds, outpacing asset yield
re-pricing this quarter.
Volume growth slowed sequentially: Volume growth
slowed this quarter – loans grew by 3% QoQ / 66% YoY.
Deposits declined 1% QoQ / 79% YoY. Loan growth was
hampered by macro uncertainty and lagged customer
response given rising rates.
Core non-interest income growth rebounded:
Growth picked up from 14% YoY in QE Sep-10 to 32%
YoY, driven by strength across all segments.
Asset quality metrics were stable: Gross NPLs were
up 8% QoQ; coverage ratio at 76% was comfortably
above RBI’s requirement. Yes Bank indicated that its
exposure to the MFI sector is Rs2.93 bn (0.94% of
loans); so far, it has seen no slippages in this area.
Reducing price target to reflect estimate changes,
higher bear case probability: We are reducing our
price target from Rs455 to Rs395. We are now applying
a higher probability to our bear case scenario (20%) to
factor in increased uncertainty about economic growth
following recent developments with regard to inflation.
We have also reduced our earnings estimates slightly.
Maintain Overweight; valuations attractive: We
expect EPS growth to average 25% over the next two
years. In this context, we think that the current
valuations at 10x F2012e earnings and 1.7x BV are very
attractive.
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