Yes Bank - Margins surprises positively - Emkay

Reco: ACCUMULATE
CMP: Rs 372
Target Price: Rs 460

- Yes Bank Q2FY14 NII at Rs6.7bn/PAT at Rs3.7bn, ahead of estimates led by a) sequentially flat NIMs as against our estimate of contraction b) swap gains of Rs1.2bn

- GNPA at Rs1.3bn / NNPA at Rs0.2bn grew 26% / 60% qoq respectively; though slips a little but remain in line with our estimates. PCR has declined by 310bps qoq to 85.3%

- Though lower tier 1 ratio expected to remain key concern on stock but risk to margins has abated as short term rates have fallen significantly since August

- At CMP, stock quotes at 2.0x/1.6x of its FY14E/FY15E ABV. Upgrade to ACCUMULATE with TP of 460 as risk to margins has abated. Concern remains on tier 1 capital.

Source : Equity Bulls

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