YES Bank shares rise ahead of Q2 results; Here's what to expect?

Watch now: World Cup 2023 match today, Australia vs Pakistan; AUS vs PAK World Cup squads, toss timings, live streaming details; IND vs BAN match highlights, Virat Kohli’s century Brokerage firms, tracking YES Bank, expect a net profit of around Rs 300-310 crore, doubling on year-on-year (YoY) basis, while down 10 per cent on quarter-on-quarter (QoQ) basis. Net Interest Income (NIIs) may come in flat, around Rs 1,950 crore, while pre-provisioning operating profit (PPOP) may come at Rs 635 crore, down 19-22 per cent QoQ and YoY. Kotak Institutional Equities expects YES Bank to report a near flat or decline in growth in NII, led by weak loan growth and rising cost of funds. Business momentum is gaining traction, primarily in retail and MSME segments but overall loan growth is likely to be lower than industry average at 7 per cent YoY. "Deposit growth at 14 per cent YoY is meeting the business requirements. We expect NIM at 2.8 per cent, declining 10bps QoQ but there is likely to be a lot of volatility, given the nature of income booked when security receipts mature," it said. "We should see healthy traction on recovery and upgrades in 2QFY24." The earnings impact is difficult to forecast given the nature of provisioning policy. Focus is shifting toward rebuilding the business for the bank. Conversations would be on growth and return to normalized levels of business operations, said Kotak which has a 'reduce' rating on the stock with a target price of Rs 17. The retail favorite YES Bank has added 8 per cent in the last six months, while the stock is down 18 per cent in the year 2022. However, the stock is up 12 per cent in the last one year, but remains flat in the last one month period. Global brokerage firm Nomura has recently initiated coverage on YES Bank with a 'neutral' rating as it sees the lender to be on a gradual RoA recovery path. The overseas brokerage has a target price of Rs 16.50 on the stock, suggesting a marginal downside in the counter. Yes Bank’s revival post reconstruction in March 2020 has been commendable, led by new management’s focus on resolution of stressed assets; granularization assets, liabilities and fees; and strengthening governance and/or underwriting, said Nomura. Yes Bank is well positioned to deliver on growth and CET1 is comfortable, it said. "We expect improving margins and strong core-fee income growth to expand RoA from 0.2 per cent in FY23 to 1 per cent in FY27F, still significantly lower than peers," it added. "We expect a 17 per cent CAGR in loans over FY23-27F on strong growth in the retail and SME segments. Yes Bank trades at 1.1 times Septerm 25F BVPS, which adequately captures the positives." Another domestic brokerage firm, Nuvama Institutional Equities, has a sell rating on YES Bank with a target price of Rs 12. For FY24, the brokerage firm expects the lender to command a price-to-equity (P/E) value of 25.7 times, while it may continue to trade at price-to-book value (P/B) multiple of 1.2 times. The lender may have return on assets (RoA) 0.6 per cent in the current fiscal.