scorecardresearchYes Bank: What should investors do post Q2 earnings? Buy, sell, or hold?

Yes Bank: What should investors do post Q2 earnings? Buy, sell, or hold?

Updated: 25 Oct 2022, 10:50 AM IST
TL;DR.
Despite a rise in the net interest income of 32% to 1,991 crore in Q2FY23 from 1,512 crore in Q2FY22, Yes Bank saw a 32% YoY decline in standalone net profit to 152.82 crore. The bank's provisions for bad loans and contingencies rose to 583 crore.
Shares of the Yes Bank rallied 14.55% in the last one year, which is 12.21% higher than the Bank Nifty, which returned 2.34% during the same time period.

Shares of the Yes Bank rallied 14.55% in the last one year, which is 12.21% higher than the Bank Nifty, which returned 2.34% during the same time period.

Yes Bank shares fell 1% in intra-day trade on Tuesday, following a nearly 2% drop in the Muhurat trading session on Monday, after the bank's standalone net profit fell 32% year on year to Rs. 153 crore in the quarter that ended September.

In Tuesday's trade, the stock opened lower at 15.70 and dropped to 15.60 to touch an intraday low. At 10:30 a.m., the stock was trading at 15.65/share, down 0.63% on the BSE.

Despite a rise in the net interest income of 31.67% to 1,991 crore in Q2FY23 from 1,512 crore in Q2FY22, the bank saw a 32% YoY decline in standalone net profit to 152.82 crore from 225.5 crore in the same quarter of the previous fiscal due to a rise in provisions. Sequentially, the net profit was down 50.80%.

The bank's provisions for bad loans and contingencies rose to 583 crore, up by 54% on a YoY basis and 234% on a QoQ.

Total income during July-September 2022-23 increases to 6,394.1 crore from 5,430.3 crore in the same quarter of the previous fiscal year.

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Stock price chart of YES bank

The net interest margin (NIM) increased by 20 basis points sequentially and 40 basis points year on year to 2.6% for the quarter. Non-interest income grew by about 18% year on year to 920 crore in Q2FY23.

The bank's gross non-performing assets came in at 12.89% in the Q2FY23 compared to 13.45% in the previous quarter.

Post the Q2 earnings, domestic brokerage firm Nirmal Bang has given a 'sell' call on the stock with a target price of 14.8/share.

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 management expects the deal to be completed by the end of November 22. On the operational front, the numbers were stable, with improvement in margin and healthy growth in non-interest income, said the brokerage.

While another domestic brokerage firm, ICICI Securities, has maintained a 'hold' rating on the stock with an unchanged target price of 15.7/share.

Meanwhile, the Competition Commission of India (CCI) approved a proposed 8,900 crore deal on October 20 in which two entities, CA Basque Investments, part of the Carlyle Group, and Verventa Holdings, an affiliate of funds managed by Advent International, will acquire a 10 per cent stake each in the private sector lender.

The proposed combination involves the acquisition of up to 10 per cent each of the total paid-up share capital and voting rights of Yes Bank by CA Basque Investments and Verventa Holdings, PTI reported.

In July, Yes Bank announced the raising of equity capital of 8,900 crore from funds affiliated with two private equity investors, Carlyle and Advent International.

Shares of the Yes Bank rallied 14.55% in the last one year, which is 12.21% higher than the Bank Nifty, which returned 2.34% during the same time period.

An average of 13 analysts polled by MintGenie have a 'sell' call on the stock.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.

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First Published: 25 Oct 2022, 10:50 AM IST