Yes Bank falls 15% after Q2 show; should you buy, sell or hold?
Brokerages cut target price as they foresee revenue decline ahead as well as a need to slow down on loan growth.
Yes Bank’s shares fell around 15 percent in the morning trade as investors reacted to its September quarter results. Brokerage houses have highlighted how the revenue could decline and loan growth needed to come down.
The lender posted net profit of Rs 964.7 for the September quarter, a fall of 3.8 percent compared to the same quarter last year. Its asset quality though took a hit during Q2.
Also Read: Top 10 takeaways from Yes Bank Q2 results
The private sector lender's net dipped year-on-year (YoY), which includes an impact of Rs 252.2 crore of one-time mark to market provisioning, predominantly on corporate bonds. Excluding these and profit on sale of investments, adjusted net profit grew 36 percent YoY.
Net interest income grew 28.2 percent YoY to Rs 2,417.6 crore, while the net interest margin was stable at 3.3 percent.
Asset quality deteriorated during the quarter. Gross non-performing assets (as a percentage gross advances) increased to 1.60 percent against 1.31 percent in the June quarter. Net NPA was also higher at 0.84 percent against 0.59 percent in the previous quarter.
Provisions and contingencies in Q2 at Rs 939.98 crore shot up sharply by 50.2 percent sequentially and 110.3 percent YoY.
"The above provision included Rs 409.2 crore towards NPA provisioning, Rs 9.7 crore on account of NPI/ARC provision, Rs 344.9 crore towards investment provisioning, Rs 92.7 crore of amortisation of MTM provisions on bonds allowed under the RBI dispensation, and Rs 117.6 crore of standard assets provisions," Yes Bank said.
Brokerage: Jefferies | Rating: Buy | Target: Cut to Rs 285
Jefferies said that the firm reported below estimates due to higher provisions. It highlighted that growth will has to slow down materially and revenue could decline in the second half of this fiscal.
Brokerage: Credit Suisse | Rating: Neutral | Target: Cut to Rs 190
Credit Suisse said that the bank will have to sharply slow down its asset growth. CET-1 is down to 9%, given uncertainty on management change, it said, adding that EPS estimates were cut by 6-7 percent due to slower growth and higher provisions.
Brokerage: Nomura | Rating: Neutral | Target: Rs 345
The global research firm said that net interest margins were stable, but liability franchise impacted due to high growth. There could be further risk to return ratios in the near term.
Brokerage: Deutsche Bank | Rating: Buy | Target: Cut to Rs 270
The global research firm said that weaker asset quality and managing capital & liquidity is crucial. Net interest margins hold up well, while fee growth remains strong. It expects credit costs to be higher in the second half. Loan growth at 61% is exceptionally high, and will need to slow down, it added.
Source: https://www.moneycontrol.com/news/business/markets/yes-bank-falls-15-after-q2-show-should-you-buy-sell-or-hold-3089151.html
If you want more information regarding the Market News & many other tips like Intraday Tips , MCX Normal Calls, Bullion Market Tips , Share Market Services , NSE & BSE Market Tips , Free MCX Market Tips , MCX Premium Tips , Bullion Energy Tips , commodity market tips.
Call On TOLL FREE Number: 9009010900
Whatsapp User Join Our Group: 9300421111
Post a Comment