The brokerage appreciates Yes' improving operating performance and see RoA rising from ~0.6% in FY25 to ~0.9% in FY26E and hitting the 1% mark in FY27E, benefitting from NIM expansion and muted credit costs and values the stock at ~0.9x FY27E ABV (~0.8x earlier) and arrive at revised target price of Rs 16 (versus Rs 15). Basis limited downside, rating is upgraded to Reduce (versus Sell).
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ICICI Securities Report
Yes Bank Ltd. reported Q4 FY25 PAT of Rs 7.4 billion (up 21% QoQ; 5% beat) led by net interest margin uptick, seasonal rise in fee and contained opex while asset quality improved QoQ. RoA inched up further to 0.7% (versus 0.6% QoQ). CET1 stood at 13.5%. Low-yielding RIDF investments reduced to ~8.7% of assets (versus ~11% YoY).
Our estimates of NIM expansion over FY25– 27 factor in further normalisation in RIDF and recent cut in SA rates. Gross slippages moderated to 2% annualised while net carrying value of SR now stands at ‘nil'.
We appreciate Yes' improving operating performance and see RoA rising from ~0.6% in FY25 to ~0.9% in FY26E and hitting the 1% mark in FY27E, benefitting from NIM expansion and muted credit costs.
We value the stock at ~0.9x FY27E ABV (~0.8x earlier) and arrive at revised target price of Rs 16 (versus Rs 15). Basis limited downside, rating is upgraded to Reduce (versus Sell).
Key risks: Faster-than-expected ramp-up in organic PSL and higher-than-expected NPA recoveries.
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