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YesBank Angel 220413

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    Please refer to important disclosures at the end of this report 1

    Particulars (` cr) 4QFY13 3QFY13 % chg (qoq) 4QFY12 % chg (yoy)NII 638 584 9.2 448 42.4Pre-prov. profit 634 563 12.5 430 47.3

    PAT 362 342 5.8 272 33.2Source: Company, Angel Research

    For 4QFY2013, Yes Bank reported a strong performance on the earnings as wellas the asset quality front. On the operating front, while higher-than-anticipatedgrowth in other income (42.4% yoy) aided pre-provisioning profit to grow by47.3% yoy, slightly above estimates, the bank used the opportunity to makehigher provisions (PCR up by 13 percentage points), which resulted in earnings

    growth of 33.2% yoy, in-line with our estimates.

    Business growth robust, NIMs stable qoq: During 4QFY2013, the bank registereda healthy growth in its business, as advances and deposits grew by 23.7% and36.2% yoy, respectively. CASA deposits grew by 71.6% yoy, thereby taking itsCASA ratio to 18.9% from 15.0% as of 4QFY2012. Savings deposits rose by22.8% qoq to `6,023cr. NIMs for the bank remained stable sequentially at 3.0%.The banks non-interest income grew strongly by 42.4% yoy to `379cr, largely onaccount of substantial growth witnessed in the financial advisory and retail feeincome streams. On the asset quality front, the bank witnessed an increase in theGross NPA levels (higher by 23.7% sequentially, on an absolute basis). However,the bank stepped up its PCR from 79.6% to 92.6%, resulting in a 3bp sequentialdecline in the Net NPA ratio to 0.01%.

    Outlook and valuation: Yes Banks growth as well as its Managements trackrecord has been impeccable so far. The bank has taken the challenge of buildinga retail deposit franchise head-on and has doubled its branch network over thepast two years to 430 branches now. We expect the bank to continue registeringrobust growth on the retail deposit franchise front, however, with the likely entry ofnew strong players in the sector, the opportunity for market shares gains could getreduced from the levels envisaged earlier.

    On the asset quality front, the bank has performed well so far, with credit costscontained at ~35bps for FY2013. However going ahead, the Management hasguided credit costs for FY2014E, to be in the range of 50-60bps and hasindicated adversely labeled assets to the tune of 1-2% of loan book, which islikely to reflect in significant increase in provisioning costs for the bank from thecurrent levels. As a result, even with 25% balance sheet growth, earnings may be

    at lower levels of 15%. At CMP, post the recent rise, the stock trades at a valuationof 2.4x FY2014E ABV and 2.0x FY2015E ABV, which in our view, factors in mostof the positives for the bank and offers limited scope for upside from the currentlevels. Hence, we recommend a Neutral rating on the stock.Key financialsY/E March (` cr) FY2012 FY2013 FY2014E FY2015ENII 1,616 2,219 2,893 3,525% chg 29.6 37.3 30.4 21.9

    Net profit 977 1,301 1,490 1,716% chg 34.4 33.1 14.6 15.1

    NIM (%) 2.6 2.7 2.8 2.8

    EPS (`) 27.7 36.3 41.6 47.8P/E (x) 17.3 13.2 11.5 10.0

    P/ABV (x) 3.6 3.0 2.4 2.0

    RoA (%) 1.5 1.5 1.4 1.3

    RoE (%) 23.1 24.8 23.2 22.1

    Source: Company, Angel Research

    NEUTRALCMP `480

    Target Price -

    Investment Period -

    Stock Info

    Sector Banking

    Market Cap (` cr) 17,196

    Beta 1.2

    52 Week High / Low 539/294

    Avg. Daily Volume 248,931

    Face Value (`) 10

    BSE Sensex 18,731Nifty 5,689

    Reuters Code YESB.BO

    Bloomberg Code YES@IN

    Shareholding Pattern (%)

    Promoters 25.8

    MF / Banks / Indian Fls 15.8

    FII / NRIs / OCBs 48.8

    Indian Public / Others 9.6

    Abs. (%) 3m 1yr 3yr

    Sensex (6.2) 7.9 6.5

    Yes Bank (8.5) 29.2 91.8

    Vaibhav Agrawal022 3935 7800 Ext: 6808

    [email protected]

    Sourabh Taparia022 3935 7800 Ext: 6872

    [email protected]

    Akshay Narang022 3935 7800 Ext: 6829

    [email protected]

    Harshal Patkar022 3935 7800 Ext: 6847

    [email protected]

    Yes BankPerformance Highlights

    4QFY2013 Result Update | Banking

    April 17, 2013

  • 7/30/2019 YesBank Angel 220413

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    Yes Bank | 4QFY2013 Result Update

    April 17, 2013 2

    Exhibit 1:4QFY2013 performance summary (standalone)Particulars (` cr) 4QFY13 3QFY13 % chg (qoq) 4QFY12 % chg (yoy) FY2013 FY2012 % chgInterest earned 2,288 2,134 7.2 1,785 28.2 8,294 6,307 31.5- on Advances / Bills 1,465 1,394 5.1 1,196 22.5 5,397 4,427 21.9- on investments 814 726 12.2 578 40.8 2,859 1,847 54.8

    - on balance with RBI & others 3 4 (37.2) 6 (57.3) 17 23 (29.0)

    - on others 5 10 (47.2) 4 20.3 21 10 104.1

    Interest Expended 1,650 1,549 6.5 1,337 23.4 6,075 4,692 29.5Net Interest Income 638 584 9.2 448 42.4 2,219 1,616 37.3Other income 379 313 21.1 266 42.4 1,257 857 46.7- Financial markets 72 39 82.7 69 4.1 252 183 38.1

    - Financial advisory 166 162 2.0 102 62.4 550 363 51.4

    - Transaction banking 93 81 15.7 70 33.0 323 237 36.2

    - Retail and others 49 31 57.6 26 91.4 132 74 78.2

    Operating income 1,018 898 13.4 715 42.4 3,476 2,473 40.6Operating expenses 384 334 14.8 284 35.0 1,335 933 43.1- Employee expenses 174 162 7.5 134 30.3 656 475 38.0

    - Other Opex 209 172 21.7 151 39.2 679 457 48.5

    Pre-provision Profit 634 563 12.5 430 47.3 2,142 1,540 39.1Provisions & Contingencies 98 57 72.1 28 242.5 216 90 139.4

    PBT 536 507 5.8 402 33.5 1,926 1,450 32.8Provision for Tax 174 164 5.9 130 33.9 625 473 32.1

    PAT 362 342 5.8 272 33.2 1,301 977 33.1Effective Tax Rate (%) 32.5 32.5 2bp 32.4 11bp 32.5 32.6 (0.5)

    Source: Company, Angel Research

    Exhibit 2:4QFY2013 Actual vs. estimatesParticulars (` cr) Actual Estimates Var. (%)Net interest income 638 615 3.7

    Other income 379 352 7.9

    Operating income 1,018 967 5.2Operating expenses 384 377 1.6

    Pre-prov. profit 634 589 7.6Provisions & cont. 98 58 68.8

    PBT 536 532 0.9Prov. for taxes 174 172 1.0

    PAT 362 359 0.8Source: Company, Angel Research

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    Yes Bank | 4QFY2013 Result Update

    April 17, 2013 3

    Exhibit 3:4QFY2013 performance analysis (standalone)Particulars 4QFY13 3QFY13 % chg (qoq) 4QFY12 % chg (yoy)Balance sheetAdvances (`cr) 47,000 43,857 7.2 37,989 23.7Deposits (`cr) 66,956 56,401 18.7 49,152 36.2

    Credit-to-Deposit Ratio (%) 70.2 77.8 (756)bp 77.3 (709)bp

    Current deposits (`cr) 6,665 5,436 22.6 4,891 36.3

    Savings deposits (` cr) 6,023 4,905 22.8 2,501 140.8

    CASA deposits (`cr) 12,688 10,341 22.7 7,392 71.6

    CASA ratio (%) 18.9 18.3 61bp 15.0 391bp

    CAR (%) 18.3 18.0 30bp 17.9 36bp

    Tier 1 CAR (%) 9.5 9.0 50bp 9.9 (40)bp

    Profitability Ratios (%)Yield on advances 12.4 12.3 10bp 12.5 (10)bp

    Cost of funds 8.4 8.5 (10)bp 9.0 (60)bp

    Reported NIM 3.0 3.0 0bp 2.8 20bp

    Cost-to-income ratio 37.7 37.2 48bp 39.8 (207)bp

    Asset qualityGross NPAs (` cr) 94 76 23.7 84 12.5

    Gross NPAs (%) 0.2 0.2 3bp 0.2 (2)bp

    Net NPAs (`cr) 7 16 (55.1) 17 (60.0)

    Net NPAs (%) 0.01 0.04 (3)bp 0.1 (4)bp

    Provision Coverage Ratio (%) 92.6 79.6 1301bp 79.2 1341bp

    Provisions to avg. assets (%) 0.4 0.3 15bp 0.2 26bp

    Source: Company, Angel Research

    Growth in customer assets remains strong

    During 4QFY2013, the bank registered a healthy growth in its business, as

    advances grew by 23.7% yoy, while deposits increased by 36.2% yoy. Growth in

    Customer Assets (loans & credit substitutes) remained strong at 30.9% yoy. Within

    the customer asset portfolio of the bank, Corporate Banking portfolio constituted

    64.7%, Retail (incl. MSME) portfolio accounted for 18.2% and the balance (17.1%)

    constituted Commercial Banking.

    CASA deposits grew by 71.6% yoy, thereby taking the CASA ratio to 18.9% as of4QFY2013, up from 15% as of 4QFY2012 and 18.3% as of 3QFY2013. Savings

    deposits rose by 140.8% yoy and 22.8% qoq to `6,023cr. As a result of strong

    performance on the CASA front, retail liabilities as a proportion of total deposits

    (CASA + retail term) have increased to 35.5% from 32.7% as of 4QFY2012. The

    Management has plans to increase the CASA ratio to 30%, and increase the share

    of retail deposits to total deposits to 55-60% in the next two years.

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    Yes Bank | 4QFY2013 Result Update

    April 17, 2013 4

    Exhibit 4:Advances and deposits growth trend

    Source: Company, Angel Research

    Exhibit 5:Customer Assets breakup as of 4QFY2013

    Source: Company, Angel Research

    Saving deposits continue to witness strong traction

    Immediately post the savings rate de-regulation, the bank had aggressively hiked

    its savings account interest rates, which is leading to a paradigm shift in the banks

    franchise from a predominantly wholesale franchise to one that will increasingly

    have much needed retail play as well.

    Highlighting the strong traction, savings account deposits rose by 22.8% qoq to

    `6,023cr (have grown by more than six times on an absolute basis since the

    savings deposit rate deregulation in October 2011). Even, the share of retail

    deposits (CASA and retail term deposits) has now risen to 35.5% of total deposits

    from 32.7% a year ago, thereby reducing the banks dependence on higher

    costing bulk deposits.

    The bank has doubled its branch network in the past two years and has aggressive

    network expansion plans (substantial tier-I licenses available with the bank), which

    will further its aspirations of creating a sustainable retail deposits franchise, as

    deposits density is relatively better in tier-I locations, and also keep the bank well

    on track to meet its version2.0 branch, CASA, and other growth targets.

    The bank has also incorporated a retail broking subsidiary to complement its current

    retail offerings and enable cross selling of 3-in-1 savings accounts to its expanding

    retail customer base.

    Exhibit 6:CASA deposit growth yoy

    Source: Company, Angel Research

    Exhibit 7:CASA ratio improves 61bp sequentially

    Source: Company, Angel Research

    10.5

    7.0

    16.4

    15.2

    22.9

    18.6

    22.3

    20.2

    23.7

    36.2

    -

    10.0

    20.0

    30.0

    40.0

    50.0

    Advances yoy growth (%) Deposits yoy growth (%)

    4QFY12 1QFY13 2QFY13 3QFY13 4QFY13

    65

    17

    18

    Corp. and Insti. Banking Commercial Banking Branch Banking

    55.6

    71.5

    86.7

    74.971.6

    -

    20.0

    40.0

    60.0

    80.0

    4QFY12 1QFY13 2QFY13 3QFY13 4QFY13

    (%)

    15.016.3

    17.318.3

    18.9

    6.0

    8.0

    10.0

    12.0

    14.0

    16.0

    18.0

    20.0

    4QFY12 1QFY13 2QFY13 3QFY13 4QFY13

    (%)

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    Yes Bank | 4QFY2013 Result Update

    April 17, 2013 5

    NIMs stable qoq

    The banks cost of funds dipped by 10bp sequentially to 8.4% during the quarter,

    primarily on account of traction in savings account deposits. Yield on advances for

    the bank witnessed a sequential increase of 10bp to 12.4%. However, the NIMs for

    the bank remained stable sequentially at 3.0%, primarily due to a 9bp qoq decline

    in the yield on investments, due to a change in the investment portfolio mix.

    Exhibit 8:Cost of funds declined largely on SA traction

    Source: Company, Angel Research

    Exhibit 9:NIM

    Source: Company, Angel Research

    Strong growth in non-interest income during 4QFY2013

    During 4QFY2013, the banks non-interest income grew strongly by 42.4% yoy to

    `379cr, on account of substantial growth witnessed in financial advisory and retail

    fee income streams. Fee income from the financial advisory segment, which is

    largely linked to deal closures during the quarter, grew by 62.4% yoy, while the

    income from the retail fee segment nearly doubled on a yoy basis.

    Exhibit 10:Strong growth in fee from financial advisory & retail segmentsParticulars (` cr) 4QFY13 3QFY13 % chg (qoq) 4QFY12 % chg (yoy)Financial markets 72 39 82.7 69 4.1

    Financial advisory 166 162 2.0 102 62.4

    Transaction banking 93 81 15.7 70 33.0

    Retail and others 49 31 57.6 26 91.4

    Other income 379 313 21.1 266 42.4Source: Company, Angel Research

    Strong asset quality maintained

    During the quarter, the bank maintained a strong asset-quality profile. Though the

    gross NPAs increased by 3bp to 0.2% (on an absolute basis, by 23.4% qoq), aided

    by a strong growth in fee income during the quarter, the bank increased its PCR

    from 79.6% to 92.6%, leading to a 3bp sequential decline in the Net NPA ratio to

    0.01%. Restructured advances remained under control at 0.31% of gross

    advances.

    9.0 9.08.7

    8.5 8.4

    5.0

    6.0

    7.0

    8.0

    9.0

    4QFY12 1QFY13 2QFY13 3QFY13 4QFY13

    (%)

    2.8 2.8

    2.9

    3.0 3.0

    2.4

    2.5

    2.6

    2.7

    2.8

    2.9

    3.0

    3.1

    4QFY12 1QFY13 2QFY13 3QFY13 4QFY13

    (%)

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    Yes Bank | 4QFY2013 Result Update

    April 17, 2013 6

    Exhibit 11:Asset quality amongst the best in industry

    Source: Company, Angel Research

    Expanding branch network; Cost ratios under control

    The bank added another 18 branches in 4QFY2013, taking the total number of

    branches to 430. It also added 228 ATMs in 4QFY2013, taking the total number

    of ATMs to 950. Going ahead, the bank has aggressive plans for network

    expansion, and is planning to add 150-175 branches in FY2014. As of

    4QFY2013, the cost-to-income ratio for the bank remained under check at 37.7%.

    Further, even after considering significant branch expansions plans, the

    management expects to contain the cost-to-income ratio below 40%.

    Exhibit 12:Branch network expands steadily

    Source: Company, Angel Research

    Exhibit 13:Cost ratios remain under control

    Source: Company, Angel Research

    Overall capital adequacy continues to remain healthy

    The banks capital adequacy ratio (CAR) continued to be strong at 18.3%, with

    tier-I ratio at 9.5%. With RoE of above 22%, the banks retained earnings itself are

    capable for funding a balance sheet growth of 18-20%. The Management has also

    approved a plan to raise US$500mn of equity capital in next 12 month, the

    timing, however would remain subject to market conditions.

    84 110 103 76 9417 24 20 16 7

    79 7880 80

    93

    50

    60

    70

    80

    90

    100

    -

    20

    40

    60

    80

    100

    120

    4QFY12 1QFY13 2QFY13 3QFY13 4QFY13

    (`cr) Gross NPA Net NPA NPA coverage % (RHS)

    356381

    400 412430

    50

    100

    150

    200

    250

    300

    350

    400

    450

    4QFY12 1QFY13 2QFY13 3QFY13 4QFY13

    1.6 1.6 1.6 1.6 1.6

    39.8 39.5 39.5

    37.237.7

    1.0

    1.2

    1.4

    1.6

    1.8

    30.0

    32.5

    35.0

    37.5

    40.0

    42.5

    4QFY12 1QFY13 2QFY13 3QFY13 4QFY13

    Opex to avg assets (%, RHS) Cost-to-income ratio (%)

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    Yes Bank | 4QFY2013 Result Update

    April 17, 2013 7

    Exhibit 14:Overall capital adequacy remains healthy

    Source: Company, Angel Research

    9.9 9.2 9.5 9.0 9.5

    8.07.3

    8.0 9.0 8.8

    17.916.5

    17.5 18.018.3

    -

    5.0

    10.0

    15.0

    20.0

    4QFY12 1QFY13 2QFY13 3QFY13 4QFY13

    Tier-I CAR (%) Tier-II CAR (%)

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    Yes Bank | 4QFY2013 Result Update

    April 17, 2013 8

    Investment arguments

    Savings rates deregulation aiding retail customer acquisition

    Yes Bank had aggressively hiked savings interest rates immediately post thederegulation, which is leading to a paradigm shift in the banks franchise, ie from

    a predominantly wholesale franchise to one that will increasingly have a much

    needed retail play as well.

    Savings rate deregulation does not allow banks to offer differential rates to

    different groups of customers, Hence, it would be unfavorable for larger players to

    offer higher rates to their entire customer base just to protect some amount of

    market share loss to competition from smaller players such as Yes Bank (more

    than 33,000 branches and `8lakh cr savings deposits for large banks compared

    to ~430 branches and `6,000cr savings deposits for Yes Bank). While the loss in

    market share for larger players would be minor, the gain for smaller banks, suchas Yes Bank offering higher savings rates, is expected to be significant, especially

    considering the low bases of their retail franchises.

    Yes Bank continue to experience strong traction in its savings deposits, with SA

    deposits increasing 22.8% qoq (and by more than six times on an absolute basis)

    during 4QFY2013, since the savings deposit rate deregulation in October 2011.

    Even going forward, we expect the savings deposit accretion for the bank to

    remain robust, however, the opportunity available for banks like Yes Bank to gain

    market share in savings deposits, could get reduced from the levels envisaged

    earlier, with the likely entry of new players in the sector.

    A-list Management and ability to raise capital

    Yes Bank has an A-list top Management team, which brings to the table rich

    experience from the best banks in India, including Bank of America, ABN AMRO,

    Citibank, ICICI Bank, Rabo India and HDFC Bank. The banks performance also

    benefits from the Managements ability to raise equity capital (at increasing,

    book-accretive premiums).

    Capital raising to be book accretive

    Yes Bank plans to grow its customer asset base at 25%+ for the next 2-3 years,

    leading to higher capital requirements. The banks capital adequacy ratio (CAR)

    continues to be strong at 18.3%, with tier-I ratio at 9.5%. With RoE of above 22%,

    the banks retained earnings itself are capable of funding balance sheet growth of

    18-20%. The Management has also approved a plan to raise US$500mn equity

    capital in next 12 month, the timing, however would remain subject to market

    conditions. Any capital raising for the bank is likely to be book-accretive and will

    aid in further enhancing the bank's credit market share going forward.

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    Yes Bank | 4QFY2013 Result Update

    April 17, 2013 9

    Investment Concerns

    Asset quality remains strong, but concerns ahead

    The bank has maintained strong asset quality in spite of growing at a fast clip overthe past few years (gross and net NPA ratios at a marginal 0.2% and 0.01%,

    respectively and credit costs contained at ~35bps for FY2013), which has been

    aided by the smaller size of its balance sheet so far. The banks PCR (without

    including technical write-offs) remains strong at 92.6% as of 4QFY2013. The bank

    has also been astute in managing its growth rate and asset-liability durations, in-

    line with the changing external environment.Going ahead, the Management has

    guided at credit costs, for FY2014E, to be in the range of 50-60bps and has

    indicated adversely labeled assets to the tune of 1-2% of loan book, which is

    likely to reflect in significant increase in provisioning costs for the bank from

    the current levels.

    Medium-term downside risks to RoA

    The banks credit market share has steadily increased on the back of a robust

    credit CAGR of 31.8% over the past five years. The bank has so far managed to

    source loans with relatively above-average profitability, keeping its NIM above

    2.7% since FY2009, in spite of a CASA ratio of just below 19%. Going forward

    though, as the size of the balance sheet increases, we believe RoA compression

    remains a risk to the bank. Having said that, the recent deregulation of savings

    account rates and the consequent strong accretion of SA deposits for Yes Bank are

    likely to aid in countering this impact to an extent.

    Outlook and valuationYes Banks growth as well as its Managements track record has been impeccable

    so far. On the liabilities side, the bank has a challenge to build a retail deposit

    franchise, which involves significant execution risks. However, it has taken the

    challenge head-on and has doubled its branch network over the past two years to

    430 branches now. Significant network expansion coupled with aggressive interest

    rate offering on the savings deposits has resulted in a sevenfold increase in savings

    deposits base since the deregulation in October 2011. We expect the bank to

    continue registering robust growth on the retail deposit franchise front, however,

    with the likely entry of new strong players in the sector, the opportunity for market

    share gains could get reduced from the levels envisaged earlier.

    On the asset quality front, the bank has performed well so far, with credit costs

    contained at ~35bp for FY2013. Going ahead, the Management has guided at

    FY2014E credit costs to be in the range of 50-60bp and has indicated adversely

    labeled assets to the tune of 1-2% of the loan book, which is likely to result in a

    significant increase in provisioning costs for the bank from the current levels. We

    had always factored in higher levels of provisioning for the bank, however,

    reflecting the directional guidance by the Management, we have revised our

    FY2014 and FY2015 estimate for provisioning expenses by 35.2% and 28.4%,

    respectively. As a result, even with 25% balance sheet growth, earnings may be at

    lower levels of 15%.

    At the CMP, post the recent rise, the stock trades at a valuation of 2.4x FY2014EABV and 2.0x FY2015E ABV, which in our view, factors in most of the positives for

    the bank and offers limited scope for upside from the current levels. Hence, werecommend a Neutral rating on the stock.

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    Yes Bank | 4QFY2013 Result Update

    April 17, 2013 10

    Exhibit 15:Key assumptionsParticulars (%) Earlier estimates Revised estimatesFY2014 FY2015 FY2014 FY2015Credit growth 25.0 28.0 26.0 28.0Deposit growth 25.0 28.0 25.0 26.0

    CASA ratio 25.8 30.0 22.1 26.0

    NIMs 3.0 3.0 2.8 2.8

    Other income growth 19.9 27.6 19.1 26.0

    Growth in staff expenses 30.0 30.0 30.0 30.0

    Growth in other expenses 30.0 30.0 32.5 30.0

    Slippages 0.8 0.9 0.9 1.0

    Source: Angel Research

    Exhibit 16:Change in estimatesParticulars (` cr) FY2014 FY2015Earlierestimates Revisedestimates Var. (%) Earlierestimates Revisedestimates Var. (%)NII 2,786 2,893 3.8 3,464 3,525 1.8

    Non-interest income 1,474 1,498 1.6 1,880 1,887 0.3

    Operating income 4,260 4,390 3.1 5,344 5,411 1.3Operating expenses 1,727 1,752 1.4 2,245 2,277 1.4

    Pre-prov. profit 2,533 2,639 4.2 3,099 3,134 1.1Provisions & cont. 282 381 35.2 417 534 28.2

    PBT 2,251 2,257 0.3 2,682 2,599 (3.1)

    Prov. for taxes 765 767 0.3 912 884 (3.1)

    PAT 1,486 1,490 0.3 1,771 1,716 (3.1)Source: Angel Research

    Exhibit 17:P/ABV band

    Source: Company, Angel Research

    0

    100

    200

    300

    400

    500

    600

    700

    800

    Jul-05

    Nov-0

    5

    Mar-06

    Jul-06

    Nov-0

    6

    Mar-07

    Jul-07

    Nov-0

    7

    Mar-08

    Jul-08

    Nov-0

    8

    Mar-09

    Jul-09

    Nov-0

    9

    Mar-10

    Jul-10

    Nov-1

    0

    Mar-11

    Jul-11

    Nov-1

    1

    Mar-12

    Jul-12

    Nov-1

    2

    Mar-13

    Jul-13

    Nov-1

    3

    Mar-14

    Price (`) 1x 1.5x 2x 2.5x 3x

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    Yes Bank | 4QFY2013 Result Update

    April 17, 2013 11

    Exhibit 18:Recommendation summaryCompany Reco. CMP(`) Tgt. price(`) Upside(%) FY2015EP/ABV (x) FY2015ETgt. P/ABV (x) FY2015EP/E (x) FY2013-15EEPS CAGR (%) FY2015ERoA (%) FY2015ERoE (%)AxisBk Buy 1,377 1,698 23.3 1.5 1.9 9.1 16.9 1.6 17.5

    FedBk Neutral 436 - - 1.0 - 7.3 10.0 1.2 13.7HDFCBk Neutral 661 - - 3.1 - 15.5 21.7 1.8 22.0ICICIBk* Buy 1,097 1,306 19.0 1.6 1.9 11.3 15.5 1.4 16.5

    SIB Accumulate 24 25 5.4 0.9 0.9 5.2 11.4 1.0 17.1

    YesBk Neutral 480 - - 2.0 - 10.0 14.9 1.3 22.1AllBk Accumulate 136 155 14.2 0.5 0.6 3.8 12.6 0.8 14.2

    AndhBk Neutral 91 - - 0.6 - 3.9 4.2 0.8 13.4BOB Buy 676 815 20.5 0.7 0.9 4.7 17.0 1.0 16.0

    BOI Accumulate 316 360 13.7 0.7 0.8 4.6 21.8 0.8 15.1

    BOM Accumulate 49 56 14.9 0.5 0.6 3.7 14.8 0.6 15.6

    CanBk Accumulate 414 461 11.2 0.7 0.8 4.8 14.0 0.8 14.1CentBk Neutral 68 - - 0.6 - 3.8 42.8 0.6 13.3CorpBk Buy 379 453 19.5 0.5 0.6 3.6 8.3 0.8 14.4

    DenaBk Accumulate 93 101 8.7 0.5 0.6 3.5 4.3 0.8 15.3

    IDBI# Accumulate 84 96 13.6 0.5 0.5 3.6 24.5 0.9 13.5

    IndBk Buy 163 200 22.7 0.6 0.7 3.9 6.5 1.0 14.9

    IOB Buy 64 78 20.9 0.4 0.5 3.2 53.3 0.7 13.1

    J&KBk Accumulate 1,250 1,323 5.9 0.9 1.0 6.2 (5.2) 1.2 16.0

    OBC Accumulate 255 270 5.9 0.5 0.6 4.0 17.5 0.8 13.1

    PNB Buy 748 889 19.0 0.7 0.8 4.2 12.4 1.0 16.3

    SBI* Accumulate 2,244 2,567 14.4 1.3 1.4 8.0 16.4 1.0 17.0

    SynBk Accumulate 113 130 14.7 0.6 0.7 3.9 (3.5) 0.7 15.2

    UcoBk Neutral 63 - - 0.6 - 4.3 36.9 0.6 12.6UnionBk Accumulate 231 264 14.3 0.7 0.8 4.8 21.2 0.8 15.3

    UtdBk Buy 59 68 15.0 0.4 0.5 2.8 40.4 0.7 14.7

    VijBk Neutral 50 - - 0.5 - 4.6 21.2 0.5 11.7Source: Company, Angel Research; Note:*Target multiples=SOTP Target Price/ABV (including subsidiaries), #Without adjusting for SASF

    Company Background

    Yes Bank is the youngest private sector bank in the country, promoted by

    professional bankers. The bank started its operations in CY2004 and has beengrowing at a scorching pace, focusing on niche assets to maintain profitable

    margins and asset quality. The bank's thrust so far has been primarily on

    wholesale banking operations for mid-size corporates. Now aiming for a higher

    share of retail deposits, the bank has recently doubled its network to 430 branches

    (targeting the urban affluent segment) and is planning to expand its network to

    750-900 branches by FY2015.

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    Income statement

    Y/E March (` cr) FY09 FY10 FY11 FY12 FY13E FY14E FY15ENet Interest Income 511 788 1,247 1,616 2,219 2,893 3,525- YoY Growth (%) 54.6 54.1 58.2 29.6 37.3 30.4 21.9Other Income 435 576 623 857 1,257 1,498 1,887- YoY Growth (%) 20.6 32.3 8.3 37.5 46.7 19.1 26.0

    Operating Income 946 1,363 1,870 2,473 3,476 4,390 5,411- YoY Growth (%) 36.9 44.1 37.2 32.2 40.6 26.3 23.3

    Operating Expenses 419 500 680 933 1,335 1,752 2,277- YoY Growth (%) 22.7 19.5 35.9 37.2 43.1 31.3 30.0

    Pre - Provision Profit 528 863 1,190 1,540 2,142 2,639 3,134- YoY Growth (%) 50.7 63.6 37.9 29.4 39.0 23.2 18.8

    Prov. & Cont. 62 137 98 90 216 381 534- YoY Growth (%) 41.6 121.6 (28.2) (8.1) 139.4 76.5 40.2

    Profit Before Tax 466 726 1,092 1,450 1,926 2,257 2,599- YoY Growth (%) 52.0 55.9 50.3 32.8 32.8 17.2 15.1

    Prov. for Taxation 162 249 365 473 625 767 884- as a % of PBT 34.8 34.2 33.4 32.6 32.5 34.0 34.0

    PAT 304 478 727 977 1,301 1,490 1,716- YoY Growth (%) 51.9 57.2 52.2 34.4 33.1 14.6 15.1

    Balance sheetY/E March (` cr) FY09 FY10 FY11 FY12 FY13E FY14E FY15EShare Capital 297 340 347 353 359 359 359Reserves & Surplus 1,327 2,750 3,447 4,324 5,449 6,689 8,113

    Deposits 16,169 26,799 45,939 49,152 66,956 83,694 105,455

    - Growth (%) 21.8 65.7 71.4 7.0 36.2 25.0 26.0

    Borrowings 2,189 2,564 3,333 9,343 15,507 16,915 20,954

    Tier 2 Capital 1,513 2,185 3,358 4,813 5,415 5,280 5,148

    Other Liab. & Prov. 1,405 1,745 2,583 5,677 5,419 6,627 8,083

    Total Liabilities 22,901 36,383 59,007 73,662 99,104 119,564 148,111Cash Balances 1,278 1,995 3,076 2,333 3,339 3,766 4,745

    Bank Balances 645 678 420 1,253 727 1,793 2,222

    Investments 7,117 10,210 18,829 27,757 42,976 48,685 57,797

    Advances 12,403 22,193 34,364 37,989 47,000 59,219 75,801

    - Growth (%) 31.5 78.9 54.8 10.5 23.7 26.0 28.0

    Fixed Assets 131 115 132 177 230 269 323

    Other Assets 1,327 1,191 2,186 4,153 4,833 5,831 7,223

    Total Assets 22,901 36,383 59,007 73,662 99,104 119,564 148,111- Growth (%) 34.8 58.9 62.2 24.8 34.5 20.6 23.9

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    Ratio analysis

    Y/E March FY09 FY10 FY11 FY12 FY13E FY14E FY15EProfitability ratios (%)NIMs 2.7 2.8 2.7 2.6 2.7 2.8 2.8Cost to Income Ratio 44.2 36.7 36.3 37.7 38.4 39.9 42.1

    RoA 1.5 1.6 1.5 1.5 1.5 1.4 1.3

    RoE 20.6 20.3 21.1 23.1 24.8 23.2 22.1

    B/S ratios (%)CASA Ratio 8.7 10.5 10.3 15.0 18.9 22.1 26.0

    Credit/Deposit Ratio 76.7 82.8 74.8 77.3 70.2 70.8 71.9

    CAR 16.6 20.6 16.5 17.9 15.9 14.5 13.0

    - Tier I 9.5 12.9 9.7 9.9 8.7 8.7 8.3

    Asset Quality (%)Gross NPAs 0.7 0.3 0.2 0.2 0.2 0.5 1.0

    Net NPAs 0.4 0.1 0.0 0.0 0.0 0.1 0.2

    Slippages 0.9 0.9 0.2 0.2 0.5 0.9 1.0

    Loan Loss Prov. /Avg. Assets 0.3 0.3 0.1 0.0 0.2 0.3 0.3

    Provision Coverage 48.5 78.4 88.6 79.2 92.6 83.9 80.0

    Per Share Data (`)EPS 10.2 14.1 20.9 27.7 36.3 41.6 47.8

    ABVPS (75% cover.) 53.9 91.0 109.3 132.5 161.9 196.5 236.2

    DPS - 1.5 2.5 4.0 6.0 6.0 7.0

    Valuation RatiosPER (x) 46.9 34.1 22.9 17.3 13.2 11.5 10.0

    P/ABVPS (x) 8.9 5.3 4.4 3.6 3.0 2.4 2.0

    Dividend Yield - 0.3 0.5 0.8 1.3 1.3 1.5

    DuPont AnalysisNII 2.6 2.7 2.6 2.4 2.6 2.6 2.6

    (-) Prov. Exp. 0.3 0.5 0.2 0.1 0.2 0.3 0.4

    Adj. NII 2.3 2.2 2.4 2.3 2.3 2.3 2.2

    Treasury 0.7 0.3 (0.1) 0.1 0.2 0.1 0.1

    Int. Sens. Inc. 3.0 2.5 2.3 2.4 2.5 2.4 2.3

    Other Inc. 1.4 1.6 1.4 1.2 1.3 1.3 1.3

    Op. Inc. 4.4 4.1 3.7 3.6 3.8 3.7 3.6

    Opex 2.1 1.7 1.4 1.4 1.5 1.6 1.7PBT 2.3 2.5 2.3 2.2 2.2 2.1 1.9

    Taxes 0.8 0.8 0.8 0.7 0.7 0.7 0.7

    RoA 1.5 1.6 1.5 1.5 1.5 1.4 1.3Leverage 13.6 12.6 13.9 15.7 16.5 17.0 17.2

    RoE 20.6 20.3 21.1 23.1 24.8 23.2 22.1

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    Yes Bank | 4QFY2013 Result Update

    Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com

    DISCLAIMERThis document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investmentdecision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make

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    Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to thelatest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may haveinvestment positions in the stocks recommended in this report.

    Disclosure of Interest Statement Yes Bank

    1. Analyst ownership of the stock No

    2. Angel and its Group companies ownership of the stock No

    3. Angel and its Group companies' Directors ownership of the stock No

    4. Broking relationship with company covered No

    Ratings (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)Reduce (-5% to -15%) Sell (< -15%)

    Note: We have not considered any Exposure below `1 lakh for Angel, its Group companies and Directors


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