1 min read.Updated: 25 Oct 2021, 09:03 AM ISTLivemint
Brokergae firm Emkay retains Sell rating on Yes Bank shares amid persistent concerns over its asset quality, sub-par return ratios, and unfavorable risk-reward ratio
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Private sector lender Yes Bank on Friday reported a 74% year-on-year (YoY) rise in net profit at ₹225 crore for the quarter ended September, on the back of lower provisioning requirements. Shares of Yes Bank closed over 4% lower at ₹13 apiece on the BSE on Friday after its Q2 results announcement.
Its asset quality improved on a sequential basis however, as per brokerages, was still higher at 15%. Meanwhile, the bank's MD and CEO while announcing the second-quarter earnings said that the lender will have no NPAs after it transfers its entire bad loan book to the asset reconstruction company (ARC) by the end of March 2022.
Those at Emkay retain Sell rating on Yes Bank shares with a target price of ₹10 amid persistent concerns over its asset quality, sub-par return ratios, and unfavorable risk-reward ratio. “Although current management with regulatory/investor support has been able to avert bank failure, we believe that reorienting Yes Bank to a sustainable retail bank will be a tall task," the brokerage said.
Another brokerage firm Anand Rathi also has a Sell rating on the bank's stock as it expects near-term earnings to remain muted.
“Higher opex counterbalanced higher margins, which led to a ~7.5% sequential decline in operating profits for Yes Bank. Asset quality was stable; the restructured book, however, sharply rose. With a high stress book, credit cost is expected to be high in the medium term. We retain a Sell rating with a target price of ₹12," it said in a note.
Yes Bank's Fresh slippages fell sequentially to ₹1,783 crore. Of this, corporate slippages were ₹750 crore at the end of the September quarter compared to ₹1,258 crore last quarter.
Though slippages have been coming down, likely pointing towards subsiding asset quality pressure, Nirmal Bang remains wary of the elevated NPAs which the brokerage believes will take time to reduce to much more comfortable levels. It has maintained its Sell rating on Yes Bank stock with a target price of ₹12.5.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.