Yes Bank share price today: Elara Capital reveals critical things investors must focus on

Yes Bank share price today: Elara Capital highlights that the new stress loans stood at 17% while outstanding stress stood at 39% for Yes Bank. PAT of Rs 1.5 bn in Q3 FY21 grew 16% QoQ but declined 101% YoY. While there was strong sequential growth in Yes Bank operating profit and deposits, asset quality deteriorated sharply. The current share price of Yes Bank is Rs 16.05 down over 1% or Rs 0.2. 

New standard stress loans including standstill NPLs, SMA1, SMA2 and restructured loans of Yes Bank were uncomfortably high at Rs 282 bn or 17% of total loans in Q3 FY21 versus 5% in Q2 FY21. Reported GNPLs of Yes Bank stood at 15% vs 17% QoQ. Total outstanding stress loans rose sharply to 39% from 29% QoQ with proforma GNPLs rising from 18% to 20% and standard stress loans rising from 11% to 19%.

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Strong sequential Yes Bank growth in PPOP but no interest reversal on standstill NPLs:

Yes Bank deposits grew strongly at 8% QoQ though YoY there was a decline of 12%. CASA deposits grew 13% QoQ but declined 29% YoY. Loans grew 2% QoQ but declined 9% YoY. Yes Bank disbursed INR 120bn towards retail and MSME against the target of INR 100bn. PPOP grew 68% QoQ. Credit cost rose sharply from 2.9% to 5.2% QoQ due to higher stress. Yes Bank has not reversed interest on standstill NPLs. Elara Capital says if they account for estimated interest reversal of Rs 3.7 bn, the bank could have reported pre-tax loss vs reported PBT of Rs 866 mn. Adjusted NIM would be lower at 2.9% vs reported NIM of 3.4%.

Yes Bank Valuation:

Elara Capital recommends Sell rating on Yes Bank with a target price of Rs 6. With an uncomfortably high level of incremental stress, Elara Capital reiterates a Sell rating. Elara’s assessment that Yes Bank stress loans will likely rise sharply in H2FY21 / FY22E is turning out to be correct.