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Thursday, January 29, 2009

Yes Bank - Say Yes To Buying Stock - Result Update

The Bank reported Net Profit growth of 95% yoy to Rs106cr (Rs54cr), ahead of estimates on account of huge trading gains being booked during the quarter. Angel Stock broking firm have put targets and rated as stock to buy.

Yes Bank reported net profit of Rs 1.1 billion for Q3FY09. NII growth moderated during the quarter led by relatively slower advance growth and 16bps contraction in NIM’s. The bank cautiously reduced the balance sheet size by 5% qoq looking at the liquidity squeeze during the quarter and to conserve tier I capital. The net profit growth was driven by 29.4% growth in NII and higher other income.

Important Stats
Shareholding Pattern

Promoters: 32.5
MF/Banks/Indian FIs: 5.2
FII/ NRIs/ OCBs: 52.8
Indian Public: 9.5
Mkt Cap 1,802.66
P/E 6.25
Div 0.00
* EPS (TTM) 9.71
B/V: 44.45
Mkt Lot 1.00
FV 10.00

Outlook and Valuation
At the CMP, the stock is trading at 5.7x FY2010E EPS of Rs11.9 and 1.0x FY2010E
Adjusted Book Value of Rs65. While we were earlier factoring in Equity dilution of around 8% in FY2010E, with an evolving macro environment and consequent slow down in
Balance Sheet growth expected, we have changed our estimates reducing credit growth
expectations for FY2010E to 25% and not factored dilution in FY2010E. While falling
Interest rates should help improve the Operating environment for the Bank, the headwinds being faced by the Bank have set back its business expansion, possibly by up to a year and led to slowdown in several Fee Income streams.

Accordingly, we are revising the Bank’s Target P/ABV multiple to 1.5x – implying around 40% discount to the Target multiple assigned to Axis Bank – to arrive at a revised Target Price of Rs98 (Rs166).We maintain a Buy on the stock.
Source: Angel Stock Trading & broking firm
Click Here to download stock research report PDF

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