Resarch Icon :Yes Bank hits 5-year low post Q1 results; brokerages halve target price

Most global brokerage firms maintained their rating on YES Bank but some of them reduced their target price by more than 50 percent after June quarter results

Yes Bank  plunged over 10 percent to Rs 83.70 in morning trade on July 18 and hit a fresh 5-year low as net profit of the private lender plunged 91 percent year-on-year (YoY) weighed down by a three-fold increase in provisions and weak asset quality.

Most global brokerage firms maintained their rating on YES Bank but some of them reduced their target price by more than 50 percent after June quarter results. Jefferies maintains a target price of Rs 50 which translates into a fall of nearly 50 percent.

“Q1 earnings are far worse than what we had anticipated. Below inventory grade book increased by Rs 6,500 crore, which is not a good sign. About half of the new NPLs are outside the watch list,” said the Jefferies note.However, the management has assured capital infusion in Q2, but optics are too unsettling. The investment rationale, henceforth, is coterminous with capital.However, Yes Bank turned the corner sequentially in June quarter with a Rs 113.76 crore standalone profit against loss of Rs 1,506.64 crore in the previous quarter due to sharp fall in provisions.

Net interest income during the quarter grew 2.8 percent YoY to Rs 2,281 crore with muted loan growth of 10.1 percent. However, on a sequential basis, NII and loan book was down 9 percent and 2.2 percent in Q1.

The interest reversals of Rs 223 crore on account of fresh slippages during the quarter affected net interest income.
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