Yes Bank shares tumble over 12% post Q3 results. What should investors do now?

Its net interest margin (NIM) in Q3 stood at 2.5% up nearly 10 bps YoY and down 10 bps QoQ. Provisions rose 45% quarter-on-quarter (QoQ) to Rs 845 crore. While net advances rose 10.4% YoY to Rs 194,573 crore, total deposits increased 15.9% YoY to Rs 213,608 crore.

Its CASA ratio in Q3 stood at 29.9% and CET 1 ratio was at 13%. Yes Bank said its total assets rose 13% YoY to Rs 343,798 crore while non-interest income rose 56% to Rs 1,143 crore. The size of the total balance sheet grew 12.9% YoY and 2.8% QoQ to Rs 343,798 crore.

During the quarter, the bank recorded strong growth of 44% in retail advances at Rs 83,769 crore, which was the highest ever. The bank said it saw a steady growth in new card acquisition leading to 31% YoY growth in the customer base to reach 1.4 million base.

At 9.52 am, the scrip was trading 8.1% lower at Rs 18.2. However, in the last one year, the stock has risen over 35%.

Should you buy, sell or hold Yes Bank stock? Here’s what analysts say:

Domestic brokerage firm ICICI Securities has a hold rating on Yes Bank with a target price of Rs 19.3 (earlier Rs 15.7), which signals an upside potential of 6% from the current market prices.

“We expect RoA profile of 0.3%/0.6% for FY23E/FY24E, respectively. We see a gradual turnaround in relevant operating metrics driven by granular retail assets as well as liabilities and improved confidence in stability of the franchise. Post the stressed pool sale, adjusted book value (adjusted for net NPAs) has been favourably impacted to the extent of 8-10% despite lower earnings build-up for FY23E,” the brokerage said.

“Also, equity capital raise of Rs 89 billion in Q3FY23 from Carlyle and Advent provides YES with growth and confidence capital. To that extent, the stock can now command a valuation of 1.4x FY24E ABV (earlier 1.2x),” it added.

Kotak Institutional Equities
Kotak Institutional Equities maintained its sell rating on Yes bank with a revised target price of Rs 17 (from Rs 16 earlier), valuing the bank at ~1.2X book.

“We upgrade earnings to factor the reduction in credit costs post the sale of NPLs to the ARC. We are also revising our NIM estimates to factor the current funding rate cycle that would be challenging for banks that have lower retail deposit franchisees. As explained above, there are a lot many challenges that we would need to be comfortable with before we turn positive. We are not convinced if we have enough margin of safety at this price,” the brokerage said.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)