Is Yes Bank showing signs of a turnaround?

Analysts claimed that the current value offers nothing to investors after private sector lender Yes Bank NSE -0.95% reported another quarter of stable performance driven by improvement in liabilities franchise and positive surprise on slippages.

Yes Bank continues to have a sell recommendation from Kotak Institutional Equities, which values the company at 1.1X book value and calculates the stock’s fair value at Rs 14.The valuation re-rating rationale to draw investors is not yet strong, so we eagerly await a better entry moment, it stated.

However, according to the brokerage, Yes Bank is well on its way to directing a stunning turnaround that few would have anticipated.

“The bank is making progress, but creating a robust, detailed, and retail-driven deposit brand takes time and money, particularly at a time when growth is picking up for all competitors. RoE healing would take longer. The bank must simultaneously witness additional NIM increase “added Kotak.

Yes Bank is on the right track, according to JM Financial NSE 1.95%, which characterised Q2 as yet another good operating quarter for the firm.

“However, we feel that the bank’s current price of 1.1x FY24E BVPS properly reflects the positives. With a target price of Rs. 16, we rate Yes Bank as HOLD and value the company at 1.1x FY24E BVPS “It read.

The bank’s net profit for the September quarter fell 32% YoY over the weekend to Rs 152.82 crore, although net interest income (NIIs) increased 32% YoY to Rs 1,991 crore.

The earnings shortfall, according to ICICI Securities NSE -0.07%, was principally caused by higher than expected credit cost at 1.1%, which was sped up by an ageing-related provision and an increase in securities receipt provision.

“Relevant operating parameters have changed, and our confidence in the franchise’s stability has increased. However, we are still aware of the risks associated with the stress pool’s delay in resolution, its net labelled exposure of 4.3%, its moderate RoE profile throughout the transition, and its supply overhang following the expiration of lock-in shares “added the brokerage.

ICICI Securities maintains a hold rating on the stock and an unchanged Rs 15.7 target price after allocating 1.2x FY24E ABV to the stock.

The stock, which has increased by almost 30% since its 52-week low, was trading 1% down on Tuesday at Rs 15.60. None of the 12 analysts that are following the stock, according to Trendlyne data, have a buy rating.