Surpassed our Target Price of Rs. 400 /share and still ...

9 June 2014

Home Equity Debt Research Contact

Surpassed our Target Price of Rs. 400 /share and still racing high

Sector – Banks CMP - 581 Target – 750 Reco - BUY
(Private Sector)

Basic Details  YES Bank, India's fourth largest private sector bank reported healthy double digit
growth for full year FY14 with Topline growing by 23% YoY to Rs 11,703Crs
Sensex 25,396 (Rs. 9,551 Crs), Op. Profit rising by 25% YoY to Rs 2,688 Crs (Rs. 2,142 Crs)
and PAT jumped by 25% YoY to Rs 1,628 Crs (Rs. 1,301 Crs).
Sensex P/E 17.92

Nifty 7583

Nifty P/E 19.87  YES Bank’s FY14 NII was up 22.4% YoY to Rs 2,716 Crs (Rs 2,219 Crs) and
Stock P/E 12.94x NIM was stable at 2.9% in FY14. Non Interest Income also increased by
Industry P/E 18.50x 36.9% YoY to Rs. 1,722 Crs (Rs. 1,257 Crs) on the back of continued growth
across all fee income streams.
Scrip Details

Market Cap Rs. 20,953 Crs  YES Bank FY14 GNPA increased marginally by 11 bps to 0.31% (0.20%) YoY
Face Value 10 and NNPA increased by 4 bps to 0.05% (0.01%). Asset quality in FY14
Share Capital Rs. 361 Crs deteriorated slightly compared to FY13 but still remains the lowest in the
52 Week L/H 216 / 585 industry. Provision Coverage Ratio (PCR) stood at 85.1% in FY14.
BSE Code 532648
NSE Code YESBANK  YES Bank’s CASA deposits grew by 29% YoY in FY14 to 22% (Rs. 16,344
Crs) as compared to 18.9% in FY13 (Rs 12,688 Crs).
Shareholding Pattern (%)
Particulars Jun-14 Jun-13  YES Bank in June 2014 raised Rs. 2,942 Crs (USD 500 mn) through a QIP by
Promoters 22.33 25.64 issuing ~5.35 Crs shares at Rs. 550 /share (premium of Rs 540/share) which
FII 45.31 46.03 will enhance the Networth of the company to Rs 10,062 Crs from Rs. 7,120 Crs
DII 20.34 15.69 in FY14.

Others 12.12 12.64  With the thumping victory of the BJP led NDA, dovish tone of RBI governor
on interest rates, new capital infusion in YES Bank which can fund ~30%
Total 100.00 100.00 growth for next 2 years, consistent dividend rewards to its shareholders (80%
in FY13-14 i.e. Rs. 8/share), robust NIM, and low NPA’s, we expect the
FY14 v/s FY13 Bottomline to surge over Rs ~Rs. 2,300 Crs and EPS of Rs. 57/share for
FY14-15.
14000 11703 Revenue PAT
12000 9551
10000

8000

6000 1301  At a CMP of Rs. 581 /share YES Bank is currently trading at a Forward P/E
FY13
4000 of merely 10x as compared to industry average of 18x. Hence we recommend a
‘BUY’ on YES Bank with a 1 year Target Price of Rs.750 /share.
2000 1618

0

FY14

Financial Performance Q4FY14 (Amt in Crs)

Quaterly Ended % Change Year Ended % Change

Particulars Q4FY14 Q3FY14 Q4FY14 QoQ YoY FY14 FY13 YoY
Revenue
EBITDA 3014 2902 2667 4% 13% 11703 9551 23%
PAT
EPS 680 615 634 11% 7% 2688 2142 25%

430 416 362 3% 19% 1618 1301 24%

11.93 11.53 10.11 -- 44.92 36.53 -

EBITDA % 22.6% 21.2% 23.8% - - 23.0% 22.4% -
PAT % 14.3% 14.3% 13.6% -
- 13.8% 13.6% -

Eq. Sh. Cap 360.63 360.56 358.62 - - 360.63 358.62 -
Reserves - - - -
- 6761 5449 -

GNPA (%) 0.31 0.39 0.20 8 bps - 11bps 0.31 0.20 -11bps
NNPA (%) 0.05 0.08 0.01 3 bps - 4 bps 0.05 0.01 - 4 bps
CAR (%) Basel III 14.4 13.8 60 bps 14.4
NA NA NA NA

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9 June 2014

Home Equity Debt Research Contact

Peer Comparison (FY13-14)

(Amt. in Crs)

Particulars Yes Bank Kotak Bank Indusind Bank ING Vysaya

Total Income 11,703 17,235 10,144 6,072

PAT 1,618 2,464 1,408 657

EPS 44.92 32.19 26.85 36.62

PAT Margin % 13.83% 14.30% 13.88% 10.82%

Eq. Sh. Cap 361 385 525 188

Re s e rve s 6761 8120 18691 6787

CMP 581 903 544 656

MCAP 20,953 69,531 28,560 12,333

P/E (x) 12.93 28.05 20.26 17.91

Book Value 197 110 366 371

P/BV (x) 2.94 8.18 1.49 1.77

GNPA (%) 0.31% 1.63% 1.12% 1.77%

NNPA (%) 0.05% 0.88% 0.33% 0.28%

ROA (%) 1.60% 0.55% 1.80% 1.00%

PCR (%) 85% 55% 70% 84%

Div (%) 80% 16% 35% 60%

ROE (%) 23% 29% 7% 9%
MCAP/ Total
Income 1.79 4.03 2.82 2.03

 YES Bank has the lowest GNPA (0.31%) and NNPA (0.05%) with a highest PCR ratio of 85%,
indicating the superior asset quality of Yes Bank as compared to its peers.

 YES Bank has been consistently rewarding its shareholders with good dividend payouts and has paid
dividend of 80% (i.e. Rs. 8/share) in FY14.

 YES Bank’s Return of Equity (ROE) of 23% in FY14, is next only to Kotak Bank of 29% and much
higher than its other peers IndusInd Bank (7%) and ING Vysya (9%). YES Bank has consistently
maintained an ROE of 20% or more and ROA of 1.5% or more for the last 6 years.

 YES Bank added 150 branches in FY14, taking the total number of branches to 560 for the year . It
also added 188 ATMs (Total ATMs now 1139) during the year FY14.

 Inspite of delivering such superior and robust financial performance YES Bank is trading at a
current P/E multiple of merely 12.94x (forward P/Ex for FY15 10x) and MCAP / Total Income of
just 1.79x, which is lowest among all its peers.

Recommendation

 At a CMP of Rs. 581 /share YES Bank is currently trading at a Forward P/E of merely 10x as
compared to industry average of 18x. Hence we recommend a ‘BUY’ on YES Bank with a 1 year
Target Price of Rs.750 share.

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9 June 20144

Home Equity Debt Research Contact

Registered Office: 1 &1-A, 3rd Floor, Birla Mansion, 134,Nagindas Master
Road, Fort, Mumbai- 400 023.

Corporate Office: 702/703, Embassy Centre, Nariman Point, Mumbai- 400 021.

Board line: 61539100 Fax: 61539134-35 / 66315520

Tel: 61539105 / 09 / 10 Email: [email protected]

EQUITY RESEARCH DESK EQUITY DEALING DESK:

Mr. Nalin Shah Mr. Nalin Shah
Mr. Rau Thakur Mr. Rau Thakur
Ms. Devanshi Dhruva Mr. Raju Madhupog
Ms. Deepa Bhatia Ms. Poonam Sawant
Ms. Foram Parekh
Ms. Manisha Thakkar

Disclaimer: This document ha sbeen prepared by the Research Desk of M/s NVS Brokerage Pvt. Ltd. and
is meant for use of the recipient only and is not for circulation. This document is not to be reported or
copied or made available to others. It should not be taken as an offer to sell or a solicitation of an offer to
buy, any security. The information in our report is not intended as financial advice. The information
contained herein is obtained and collated from sources believed reliable and we do not represent it as
accurate or complete and it should not be relied upon as such. The opinion expressed or estimate made
are as per the best judgment as applicable at that point of time and are subject to change without any
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not, have any position in, or purchase and sell securities referred to herein. NVS Brokerage Pvt. Ltd, its
affiliates, directors, its proprietary trading and investment businesses may, from time to time, make
investment decisions that are inconsistent with or contradictory to the recommendations expressed
herein. The views contained in this document are those of the analyst, and the company may or may not
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