Yes Bank - Credit substitutes drive growth but cap margins too - Emkay

Reco: HOLD
CMP: Rs 346
Target Price: Rs 355

- Yes Bank Q1FY13 NII at Rs4.7bn / PAT at Rs2.9bn - largely in line with est. Surprised +vely on non-int inc (+74% yoy) and NIM front. NIM flat at 2.8% for consecutive third quarter now

- Traction on retail front remains well on track. Share of CASA + retail deposit (37% of deposits); SME + retail loans (16% of loans). Customer assets grew 32% vs 16% growth in loans

- However, higher share of credit substitutes and bulk deposits have capped NIMs at 2.4-2.5% (calc). Traction in other income must for sustaining RoAs and earnings growth

- Ability to deliver superior return ratios with stable NIM and asset quality provides comfort. Valn at 2.2x /1.6x FY13/FY14 ABV leave limited room for upside. HOLD with tp of Rs355.

Source : Equity Bulls

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