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India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Resilient in tough times
CHANGE
Initiate coverage with BUY rating and INR325 target price
Among the fastest growing and highly profitable banks in India, its retail
foray and current macroeconomic head winds have resulted in serious
underperformance. However, margins and earnings trajectory remained
surprisingly resilient. Asset quality risks are overplayed, current
valuations factor in lot of the negatives, risk return appears favourable.
CATALYST
Decline in wholesale deposit costs and focus back on loan growth
It maintained its margins but sacrificed growth: pick up in credit growth
and moderation in wholesale deposit costs to remain the key driver for
the stock. However, this may take some time to play out as RBI continues
to remain hawkish.
VALUATION
To trade lower than historical trends as growth outlook moderates
YES currently trades at 1.4x FY13E ABV which is extremely attractive for a
private bank with ROEs of ~20% over FY11-13E. We believe most of the
negatives are in the price, hence risk return is favourable. Downside risks
to our TP and estimates could arise from higher slippages in the SME &
infrastructure space and sharp spike in deposit costs from current levels.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Resilient in tough times
CHANGE
Initiate coverage with BUY rating and INR325 target price
Among the fastest growing and highly profitable banks in India, its retail
foray and current macroeconomic head winds have resulted in serious
underperformance. However, margins and earnings trajectory remained
surprisingly resilient. Asset quality risks are overplayed, current
valuations factor in lot of the negatives, risk return appears favourable.
CATALYST
Decline in wholesale deposit costs and focus back on loan growth
It maintained its margins but sacrificed growth: pick up in credit growth
and moderation in wholesale deposit costs to remain the key driver for
the stock. However, this may take some time to play out as RBI continues
to remain hawkish.
VALUATION
To trade lower than historical trends as growth outlook moderates
YES currently trades at 1.4x FY13E ABV which is extremely attractive for a
private bank with ROEs of ~20% over FY11-13E. We believe most of the
negatives are in the price, hence risk return is favourable. Downside risks
to our TP and estimates could arise from higher slippages in the SME &
infrastructure space and sharp spike in deposit costs from current levels.
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