The bank has been able to turn the tide and showed a slight improvement in asset quality. It posted a profit of Rs 129.37 crore for the quarter against the loss of Rs 600.08 crore reported for the same quarter last year. The June quarter was profitable at Rs 45.44 crore.
Investors looking for multibaggers on Dalal Street are watching stocks closely, as they traded only a fraction above their previous high.
But analysts have a split verdict on the lender.
Independent market analyst Ambareesh Baliga said stocks should not be expected to scale past highs. “After the expansion and dilution of equity capital, it is very unlikely that it will reach that mark,” he said.
“It is a very rare case when a bank has survived a moratorium imposed by the RBI. In previous cases, such banks could not survive or they merged with larger pairs, “he said.
Just a year ago, there was a question mark on the very survival of YES Bank. Since the government has to put in professional management, it has managed to help it not only survive but also show some early signs of growth.
“YES Bank has posted decent earnings, considering the challenges it has faced over the past few quarters,” said Ajit Mishra, Vice President of Research at Religare Broking.
“But we would still be cautious as the NPA situation could worsen due to the pandemic. At this point, the prudent approach would be to stick with the big private lenders, ”he said.
Analysts keep a close eye on NPLs, provisions, margins, and the growth of deposits and loan portfolios. The percentage of gross non-performing assets (ANP) stood at 16.30% of the total compared to 17.30% a quarter ago. Likewise, the net NPA improved to 4.71% from 4.96% sequentially.
The stock was trading 2 percent lower at Rs 12.57 in a depressed market on Wednesday.
Bank management is very optimistic about further improvement in the coming quarters. “The bank has generated a decent operating profit despite Covid-19 and past problems,” Prashant Kumar, CEO and CEO, told ETNow.
He said that growth and disbursement of retail and MSMEs has been good. “The bank has really accelerated on its recovery path and normalcy is being restored,” Kumar told ETNow.
In the results for the September quarter, provisions were reduced year-on-year (year-on-year), but increased quarter-on-quarter (quarterly). Net interest income (NII) slumped 9.70 percent year-on-year to 1,973 crore.
Baliga believes that YES Bank is back to normal, but the recovery will take a little longer. “Fortunes will not be made overnight. Investors have to be patient and wait for a long time to get a better return, ”he said.
Religare Broking’s Mishra said there could be an initial rally in stocks, but sustainability is doubtful. He advised investors to wait and watch the lender’s performance in the second half of the financial year.
Brokerage firm Emkay Global has a ‘sell’ rating on YES Bank’s stock with a target price of Rs 9. It cited below par and unfavorable risk-reward ratios with a higher valuation than its peers.
Edelweiss has put the action “under review.” “Although raising capital is past, deposit accumulation and asset quality are key elements to monitor, not to mention stakeholder confidence. The focus on evolution over the next two or three years is an open question, ”said the brokerage.
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