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Friday, 14 July 2017

YES Bank Ltd - All set to become a Large Bank




There are many types of Banks, Private,  PSU, Small cap, Large cap Banks and we have them all on India. So what makes YES Bank Stand out in the industry.

YES Bank had started its operations in the year Nov 2003 as a small private sector Bank, with an IPO at Rs. 40. Today it is one of the finest mid cap Bank poised to become one of the larger banks in the Indian Banking Industry. So we do wonder what is behind this growth story.

The answer, my friend, as they say lies in an excellent management and a shrewd business strategy. When it started operations in 2003, the management mostly concentrated on  Corporate Banking. The management was aware that with the limited manpower and branch infrastructure, they might not be able to handle the large granular retail business. The strategy worked and with their niche marketing and specialized service for Corporate customers, they were able to establish a strong foot hold in Corporate sector. For 10 years, from 2003 to 2013, YES Bank focused mainly on Corporate business.

With their efficient management and conservative approach to lending,  YES Bank has been able to keep its bad debts in check at a time when all Banks are bleeding due to high NPAs in Corporate Infra sector. YES Bank have lowest NPA ratio as Gross NPA of  0.97% & Net NPA of 0.39% compared with peers, SBI(9.97% and 5.97%) & ICICI Bank(7.91 & 4.35%).


From year 2013 - YES Bank changed its strategy and started to spread it's roots in Retail Banking business to increase its market share and on turn increase its balance sheet size.
 

They launched various personal finance products -
Credit Cards
Personal Loans
Housing Loans
Demat A/cs


Increased the  Branch network


In 2015 YES Bank set a big target for themselves - to grow their balance sheet by 5 times till 2020. A 500% growth in 5 years is not a small task by any means a rarely achieved feat by any company. However, going by their past history & efficient management this might just be possible.
If we analyse the financial of the company,We understand that most of their returns come from Corporate business compared  ICICI &  HDFC.


If YES Bank able to expand as expected by company  in retail business with cumulative growth, the huge target set by them could be achieved and you see another Large Bank in the country with their motto as to become the Finest quality Large bank of world in India by 2020.


In the latest quarterly results of the company, company has reported net profit of Rs.965.5 cr (31.9% growth on YoY basis).Net Interest income of Rs. 1808.9 Cr (44% growth on YoY basis).Non Interest Income of rs.1132.2 cr (17.8% growth on YoY basis).Total net income of Rs.2941.1 Cr (32.7% growth on YoY basis).Book value @489.3 Per Share.

Total Assets grew by 25% YoY to rs.222,145.2 Cr and total deposits grew by 22.6% YoY to rs. 150,240.9 Cr. CASA Ratio @ 36.8% with increase of 7.2% in last one Year on the back of 52.2% YOY.

Gross NPA at 0.97% and Net NPA @ 0.39% One point to be noted that bank has recovered rs. 545.6 Cr (60% of total exposure) from one extraordinary account classified as NPA earlier. Provision of rs.227.9 Crores retained against remaining sustainable debt exposure which is currently expected to be upgraded in June 2019 in line with RBI Guidelines.



Yes bank’s Equity share is currently trading at around rs 1750-1800 range with a P/E of 22.68 and Price to Book Value as 3.66,having market capitalization at this price is Rs. 81,000 cr. Stock Split of 5 For 1 has been approved by Board, subject to approval from Shareholder’s & RBI.

All these factors will make stock fetching decent returns in future compare to other large cap banking Stocks.

Disclosure: This is not any investment advice. Please take your own decision with the help of your financial advisor and we may have our personal holdings in above mentioned equity.

2 comments:

  1. Yes Bank is in a Bull Trend, any dips must be bought a close below 1600 on weekly basis will only change the trend. So i am buying.

    ReplyDelete
  2. Absolutely agree mam I have also bought for long term view

    ReplyDelete

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