Yes Bank share price retraces from 2-year high. Should you accumulate?

According to Prabhudas Lilladher, Yes Bank shares need to sustain above ₹20.75 apiece levels to maintain positive bias. Morgan Stanley report says that strong cyclical improvement can be expected in the private lender’s performance in next few years. The brokerage is also expecting strong RoA improvement helped by higher PPoP margins/lower credit costs as macro improves further.

Highlighting the strong fundamentals that may favour Yes Bank shares, Morgan Stanley research report says, “We expect strong RoA improvement to 1% by F25, helped by higher PPoP margins/lower credit costs as macro improves further. But at 1.6x F24 P/BV, the stock is pricing this in. Beyond 1% RoA, improvement will be tough and gradual as we see much higher competitive intensity in this cycle.”

The brokerage went on to add that Yes Bank has focused on reducing asset quality challenges by accelerating provisions and cleaning up its balance sheet (organically as well as via asset sales). We expect its gross impaired loans to fall to 9% by end-F23 from a peak of 22% in Mar-20. Further, unlike the previous cycle, the bank has focused on increasing the share of retail on both sides of the balance sheet. Indeed, the share of CASA + retail deposits currently amounts to 48% of total funding (vs. 33% in Mar-20). On assets, retail/SME loans have increased to 66% vs. 44% in Mar-20 (implied CAGR of 23%).

Yes Bank share price target

Vaishali Parekh, Vice President — Technical Research at Prabhudas Lilladher said, “Yes Bank share price has witnessed strong improvement in the bias after the long consolidation phase hovering between the ₹12 and ₹17 levels and indicated a breakout with decent volume participation to strengthen the trend. The stock has moved from ₹17 levels to ₹24.75 from Friday to Tuesday sessions but witnessed some heavy profit booking on Wednesday to close near ₹22 zone.”

Vaishali Parekh of Prabhudas Lilladher went on to add that further rise in Yes Bank share price is anticipated but the stock needs to sustain above the previous peak zone of ₹20.75 levels to maintain the positive bias it has gained in last five sessions.

“If Yes Bank share price sustains above ₹20.75 apiece levels then we expect for the initial targets of ₹28 to ₹32 and then ₹37 levels in the next two to three months. Our view gets negated once a decisive breach below ₹18 zone is witnessed.”

Asking Yes Bank shareholders to hold the stock for long term, Ravi Singhal, CEO at GCL Securities said, “Yes Bank shareholders can hold the stock for long term or say one year keeping ₹44 target in mind.” However, Ravi Singhal of GCL Securities advised Yes bank shareholders to upgrade trailing stop loss to ₹17 apiece levels.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.