Yes Bank Q1 Results Review - Valuations Appear Fully Pricing In The Financial Turnaround: ICICI Securities

ICICI Securities Report

Yes Bank Ltd. has reported Q1 FY25 profit after tax of Rs 5.0 billion with stable net interest margin QoQ. While opex and credit costs declined QoQ, return on asset was flattish due to lower other income (MTM loss).

Post the warrant conversion, CET 1 stands at 13.3%. Operating parameters have been on improving trajectory though RoA remains burdened by bulky RIDF investment (~11% of total assets).

Yes Bank is making concerted efforts in organic priority sector lending origination, which should ease incremental RIDF burden, aiding yields and RoAs. This, coupled with easing credit costs, could improve RoA to 0.7/1.0% by FY25/26E.

However, current valuation at ~1.5x FY26E adjusted book value seems to adequately capture the turnaround.

Maintain Sell with an unchanged target price of Rs 20.

Key risk: Faster than expected ramp-up in organic PSL yielding steep RoA improvement

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