Should you buy, sell, short Yes Bank shares after better-than-expected Q1?

The lender reported a 32% year-on-year (YoY) jump in net interest income (NII) 1,850 crore at the end of June quarter while Net Interest Margin (NIM) marginally declined to 2.4% during Q1FY23 from 2.5% in the previous quarter. Its total provisions declined 62% year-on-year 175 crore by end-June, mainly aided by less slippage.

Yes Bank’s asset quality saw an improvement in Q1 as Gross Non-Performing Assets (NPA) as a percentage of total assets stood at 13.40% in Q1FY23 as compared to 13.9% in Q4 of the previous fiscal. The net NPA ratio of the bank also increased to 4.2% in Q1FY23 as against 4.5% in Q4FY22.

brokerage on Yes Bank shares

“Yes Bank posted a strong outperformance with 50% year-on-year PAT beating our estimate. This is due to low credit cost and flexible NIM. We are seeing a 40%/17% growth in FY23E/FY24E EPS in higher NIMs and lower provisions. Nevertheless, FY23E RoA remains below 0.75% directed at 0.6% as we anticipate a slowing of CASA amid rising rates. Accordingly, our target price increases 12 (from 11), factoring in higher earnings and transfers to ARCs,” said brokerage Edelweiss while maintaining a ‘reduce’ stance. bank stock,

The ARC transaction is expected to help reduce on-balance sheet stress and enable the bank to focus its management efforts on business growth. The bank is confident of delivering 15% credit growth in FY13, another brokerage Nirmal Bang highlighted.

“Despite the overall better-than-expected results and improvement in the overall picture in the bank, we find the medium-term ROA target unattractive given the investible opportunities available with large banks. We maintain sell on Yes Bank shares with Target Price (TP) 13.4,” said Nirmal Bang.

The views and recommendations given above are those of individual analysts or broking companies and not of Mint.

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