ICICI Securities research report on Yes Bank
YES Bank (YES) reported a muted set of Q2FY24 PAT at INR 2.25bn with 0.2% RoA (vs 0.4% QoQ), pulled down by pressure on margins and elevated slippages. The bank is progressing reasonably well on balance sheet parameters namely CET1, LDR, NNPA, SR, granularity, mix, CASA, etc. However, progress on operating earnings (PPoP) has been much slower. While we are not worried on incremental asset quality / credit costs, we see only gradual improvement in PPoP margins. Due to bulky RIDF drag, we expect RoA to remain sub-par in the near term and expect RoA normalisation FY26 onwards.
Outlook
We retain our TP at INR 14 (~0.9x FY25E ABV). However, post the stock price correction, (~10% in 3 months) our rating has changed to REDUCE vs Sell earlier. Key risks: Better-than-expected growth / margins.
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