Thursday, June 12, 2008
YES BANK, BSE: 532648 NSE: YESBANK ISIN: INE528G01019
YES BANK is financially owned by Mr. Rana Kapoor and Mr. Ashok Kapur, who have a collective financial stake of 38.62%
Yes Bank reported strong set of numbers for 4QFY08, partially allaying the concerns on its exposure to Forex derivatives. The bank has reported Rs645mn of net profit for Q4 FY08. The robust performance has been driven by strong growth in net interest income (supported by higher NIM’s for the quarter) and moderate growth in the operating cost. The share of non interest income to total income continues to remain strong at 50%. As a result the operating profit has grown by A WHOPPING 102.4% yoy to Rs1209mn.
Yes Bank’s NII has grown by 134.3% yoy for Q4FY08 to Rs1084mn. The strong performance has been driven by improved margins.
Valuation Table
Y/E March 31 Net Income Net Profit EPS ABV(Rs) PE (x)
FY2007 3,677 900 3.2 28 57.7
FY2008 6,912 2,000 6.8 44.2 24.4
FY2009 10,100 3,100 9.8 64.2 17.0
FY2010 14,498 4,977 15.9 76.9 10.5
Strong Management with a focus approach:
Yes Bank’s top management team is highly skilled and rich in experience gathered from few best banks in India. The bank’s intellectual capital has helped itself to have a strong foothold in the emerging Indian banking industry.
Capital Adequacy comfortable
The bank is comfortably capitalized with tier I CAR at 8.5 % as the bank’s raised Rs3.4bn (USD84mn) in FY08 through Preferential Equity Placement of 14.7 million to Orient Global. In addition, the bank is likely to raise more funds by way of issuance of up to 20 million equity shares in one or more tranches. The bank is firm on its plans to raise US$140-150mn through issuance of 20mn shares. Even then, the bank should be able to sustain current growth rates till September 2008.
Entry into new businesses – ARC, AMC and broking
The bank also plans to enter into three new businesses over next 18 months. The bank has already tied up with three state owned banks and a foreign bank for setting up an Asset Reconstruction Company. Yes Bank is likely to hold 29% stake in the venture. The bank is also looking at private banking as an extension to its knowledge banking proposition. The bank has launched two funds, one each in food and agri business and life science. The bank is also panning to set up and AMC in FY10. Yes Bank is also planning to start retail broking business in FY09. I believe that the retail broking business will not only help the bank to ramp up income from wealth management business but will also help it investment banking division in the IPO business as it will give it wider distribution arm for the IPO mandate that the investment banking division undertakes.
"I remain upbeat on Yes Bank’s business model of knowledge expertise and robust balance between fund and non-fund based services. The entry into new businesses which are relatively less capital intensive will add further value to the bank."
Considering the excellent exponential growth, strong reserves/book value and expected increased incremental cash flows, conservative investors can consider buying shares of YES BANK at the current price of around 133. The share price showed a 52 week high of about Rs.277. It is quite reasonable to expect a return of 35 to 40 percent in one year in this share.
Disclaimer: This report has been prepared solely for information purposes and the investment is the sole decision of the investor. Such information is impersonal and is not an inducement to invest. The information contained herein has been obtained from sources believed to be reliable and author, accepts no responsibility for the accuracy of its contents. Investors are advised to satisfy themselves fully before making any investments or committing themselves and should consult their own financial consultants whether and how to use such information in making any investment decision. The author accepts no liability arising out of use of the above information/ article.
YES BANK, BSE: 532648 NSE: YESBANK ISIN: INE528G01019
YES BANK is financially owned by Mr. Rana Kapoor and Mr. Ashok Kapur, who have a collective financial stake of 38.62%
Yes Bank reported strong set of numbers for 4QFY08, partially allaying the concerns on its exposure to Forex derivatives. The bank has reported Rs645mn of net profit for Q4 FY08. The robust performance has been driven by strong growth in net interest income (supported by higher NIM’s for the quarter) and moderate growth in the operating cost. The share of non interest income to total income continues to remain strong at 50%. As a result the operating profit has grown by A WHOPPING 102.4% yoy to Rs1209mn.
Yes Bank’s NII has grown by 134.3% yoy for Q4FY08 to Rs1084mn. The strong performance has been driven by improved margins.
Valuation Table
Y/E March 31 Net Income Net Profit EPS ABV(Rs) PE (x)
FY2007 3,677 900 3.2 28 57.7
FY2008 6,912 2,000 6.8 44.2 24.4
FY2009 10,100 3,100 9.8 64.2 17.0
FY2010 14,498 4,977 15.9 76.9 10.5
Strong Management with a focus approach:
Yes Bank’s top management team is highly skilled and rich in experience gathered from few best banks in India. The bank’s intellectual capital has helped itself to have a strong foothold in the emerging Indian banking industry.
Capital Adequacy comfortable
The bank is comfortably capitalized with tier I CAR at 8.5 % as the bank’s raised Rs3.4bn (USD84mn) in FY08 through Preferential Equity Placement of 14.7 million to Orient Global. In addition, the bank is likely to raise more funds by way of issuance of up to 20 million equity shares in one or more tranches. The bank is firm on its plans to raise US$140-150mn through issuance of 20mn shares. Even then, the bank should be able to sustain current growth rates till September 2008.
Entry into new businesses – ARC, AMC and broking
The bank also plans to enter into three new businesses over next 18 months. The bank has already tied up with three state owned banks and a foreign bank for setting up an Asset Reconstruction Company. Yes Bank is likely to hold 29% stake in the venture. The bank is also looking at private banking as an extension to its knowledge banking proposition. The bank has launched two funds, one each in food and agri business and life science. The bank is also panning to set up and AMC in FY10. Yes Bank is also planning to start retail broking business in FY09. I believe that the retail broking business will not only help the bank to ramp up income from wealth management business but will also help it investment banking division in the IPO business as it will give it wider distribution arm for the IPO mandate that the investment banking division undertakes.
"I remain upbeat on Yes Bank’s business model of knowledge expertise and robust balance between fund and non-fund based services. The entry into new businesses which are relatively less capital intensive will add further value to the bank."
Considering the excellent exponential growth, strong reserves/book value and expected increased incremental cash flows, conservative investors can consider buying shares of YES BANK at the current price of around 133. The share price showed a 52 week high of about Rs.277. It is quite reasonable to expect a return of 35 to 40 percent in one year in this share.
Disclaimer: This report has been prepared solely for information purposes and the investment is the sole decision of the investor. Such information is impersonal and is not an inducement to invest. The information contained herein has been obtained from sources believed to be reliable and author, accepts no responsibility for the accuracy of its contents. Investors are advised to satisfy themselves fully before making any investments or committing themselves and should consult their own financial consultants whether and how to use such information in making any investment decision. The author accepts no liability arising out of use of the above information/ article.
Indian indices ended with marginal gains in a volatile trade on Thursday ahead of Union Budget to be presented on July 5.
ReplyDeleteequitytips
Hey, thanks for the information. your posts are informative and useful.
ReplyDeleteKotak Mahindra Bank