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Religare Enterprises
YES Bank (Buy)
CMP: ₹1,125.70
Target ₹1, 600
We discussed the impact of currency demonetisation with the YES Bank management. The key takeaways are CASA deposit influx over the past 10 days equals 3-4 per cent of bank’s existing deposits; management plans to go slow on bulk deposits given the retail surge; likely to rationalise over the deposit rates in the next 1.5-2 years, boosting margins; loan growth guidance intact at about 30 per cent for FY17; and no headwinds expected on asset quality of the SME LAP/developer financing book even if property prices were to correct 25-30 per cent.
YES Bank is proactively following up with SME and micro-SME NPA accounts to have existing dues settled in cash. Since demonetisation, 3-4 NPA accounts in these segments have repaid their entire dues worth ₹4-5 crore in cash. YES’s retail/SME LAP portfolio is backed by hard collaterals/cash flows with an LTV of 50 per cent. In addition, YES has a cover of 3-4x (excluding land) on its developer financing book, which is backed by receivables.
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