Shares of YES Bank Ltd. jumped up to 10% to hit a day's high of ₹28.55 on the NSE in Monday's trade after strong March quarter earnings. At 9:52 am, the scrip was trading 5.54% higher at ₹27.60. YES Bank shares have gained 22% so far this year and are up nearly 75% in the last one year.
YES Bank's March quarter earnings doubled year-on-year, led by lower provisions though Kotak Institutional Equities noted that several one-offs relating to IT refund, write-back in security receipts and gains in sale of loans to ARC, but offset by higher provisions.
The brokerage said that one-offs dominate earnings and that most one-offs were used to strengthen the balance sheet metrics.
Kotak in its note highlighted that the lender's business is steadily recovering.
The broking firm also said that the current price factors most of the positive outcomes while the delivery of better return ratios and steady growth that is similar to other frontline banks are still a few years away.
"We would need a far lower valuation multiple to change our view. There is unauthenticated media reports on change in shareholding structure but we don’t see this to have a bearing on the financials in the near term," the brokerage said.
The domestic brokerage firm has maintained a 'Sell' recommendation on the YES Bank stock with a target price of ₹19 per share.
The private sector lender reported a net profit of ₹452 crore for the fourth quarter, a 123% year-on-year (YoY) jump from ₹202 crore clocked in the year-ago period.
YES Bank earned interest income of ₹7,447.17 crore, up from ₹6,216.24 crore reported in the corresponding quarter of the last financial year. This was a 20% YoY jump.
Interest expended during the quarter under review came in at ₹5,294.15 crore, which was up from ₹4,111 crore. It was up 29% on the YoY basis.
The lender's gross non-performing asset stood at 1.7%, down from 2.2% in the same quarter last year. The net NPA for the quarter came in at 0.6%, a 0.80% improvement on a year-on-year basis.
YES Bank's net interest margins, a key profitability indicator for the lender, stayed flat sequentially at 2.4%.
The bank's net interest income (NII) of ₹2,153 crore was a marginal uptick of 2% against ₹2,105 crore in the corresponding quarter last financial year.
Its total deposits stood at ₹2.6 lakh crore, up 22.5% while net advances grew 13.8% YoY to ₹2.27 lakh crore.
The returns on assets grew to 0.5% from 0.2% in the previous quarter and 0.2% in the same quarter of last financial year.
