Reiterate 'buy' on Yes Bank - TP Rs.536 - Geojit BNP Paribas Financial Services

- Net Interest Income (NII) at Rs.640 crore is largely in line with analysts' estimates and PAT at Rs.360 crore is higher than expected. This was driven by higher financial advisory and treasury components of Other Income which was further used to increase PCR (provision coverage ratio) to 92.6% from 80% qoq as asset quality improved sequentially.

- Loans were up 23.7% yoy and 7.2% qoq while credit substitutes grew 65% yoy and 12% qoq.

- Growth guidance remains at 25-30% inclusive of credit substitutes.

- Management is confident of higher investment gains in FY14 and guided for higher credit costs.

- Higher-than-expected financial advisory fees in two consecutive quarters were a positive surprise but judiciously utilised to improve PCR above 90%.

- There is still sufficient headroom for higher investment gains in 2HFY14 which would compensate the expected moderation in advisory fees.

- Branch expansion and CASA growth remains on track.

- The stock is rated to 'buy' with a target price of Rs.536.

Source : Equity Bulls

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