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BofA-ML
YES Bank (Buy)
CMP: ₹330.55
Target: ₹515
We hosted the retail management team of YES Bank (20+ management personnel) for a meeting with about 30 global and local investors in our Mumbai office on Friday. Key takeaways: 1) leadership team comprises experienced industry veterans who have worked in various capacities towards scaling up of businesses from scratch as well as witnessed at least 2-3 business cycles; 2) 43 per cent of YES Bank's branches are less than three years old and are likely to scale up driving stronger growth and lower C-I ratio; 3) bank believes CASA can continue to register strong growth over medium term allowing significant cross sell; 4) the bank has a cluster approach to customer acquisition; and 5) thrust towards digitisation in both front and back end is improving customer experience as well as reducing costs.
We base our price objective of ₹515 on 3.4x our P/B FY20E for a rising RoE profile to 21 per cent+ over the next two years from about 18 per cent in FY18.
Reiterate ‘Buy’ and highlight as one of top picks in the sector.
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