Sector: Banking

Sector view: Positive

Sensex: 29593

52Weekh/l(Rs): 895/302

Marketcap(Rscr): 36,835

6mAvgvol(000Nos): 3,111

Bloombergcode: YESIN

BSEcode: 532648

NSEcode: YESBANK

FV(Rs): 10PricesasonMarch03,2015Companyratinggrid

LowHigh 1 2 3 4 5EarningsGrowth RoAProgression B/SStrength Valuationappeal

Risk

Sharepricetrend

0

100

200

300

Mar14 Jun14 Oct14 Feb15

Yes Sensex

Shareholdingpattern(%) Jun14 Sep14 Dec14

Promoter 22.2 22.1 22.1

Insti 65.7 66.0 66.4

Others 12.2 11.9 11.5

Rating: BUY Target(13months): Rs1,005CMP: Rs878Upside: 14.5%ExitTrigger*: Rs820

Yes Bank

March04,2015ThisreportispublishedbyIIFLIndiaPrivateClientsresearchdesk.IIFLhasotherbusinessunitswithindependentresearchteamsseparatedby'Chinesewalls'cateringtodifferentsetsofcustomershavingvaryingobjectives,riskprofiles,investmenthorizon,etc.Theviewsandopinionsexpressedinthisdocumentmayattimesbecontraryintermsofrating,targetprices,estimatesandviewsonsectorsandmarkets.

Research Analyst: RajivMehta

research@indiainfoline.com

Express Idea

*Exittriggeristhepricelevelbelowwhichinvestorshouldexitposition

Balance sheet trends have been encouraging Overthepastthreequarters,YesBankscustomerassetsgrowthhaspickedupmaterially, assetmix has improved and share of savings and branch bankingdepositshas increased.Thesetrendsaremanifestationof impressiveexecutionon the strategy of accelerating growth and adding granularity to business.Substantial investment inbranchnetwork (has increasedby50%overpast24months)hasplayedapivotal rolehere. Improvement innetworkproductivity(widening distribution of retail asset/liability products), addition of newbranches, recovery in corporate lending environment and benign wholesalefundingratesare likelytodrivearobust27%CAGR inadvancesoverFY1417.YesBankiswellcapitalized(Tier1ratioat11.8%)topursuebriskgrowth.

Revenue growth outlook is robust NIM outlook for the bank is strong with bulk deposits rates heading south,persistent improvement in CASA ratio and expected increase in the share ofretail(includingMSMEandbusinessbanking)loanswhicharebetteryieldingandhavelongerduration.Growthinnoninterestincomehasbeenrobustdrivenbyimpressivetractioninfinancialadvisory,branchbankingandtransactionbankingfees and this trend is likely to continue. Additionally, declining interest rateshoulddrivesubstantialgainsonthecorporatebondportfolioforYesBank.

Asset quality to remain solid; credit cost to decline In theongoingcreditcycle,YesBanksassetqualityhas remained steady.ThecurrentstockofNetNPLsandstandardrestructuredassetsstandsatjust0.4%ofadvancesand2%ofnetworth (much lowerthanmostpeers).While incurrentquarter the restructuring activity could increase (due to end of regulatoryforbearance fromFY16),medium termassetqualityoutlook remainssanguinegivenanimprovingmacro.Sothecreditcostisexpectedtomoderate.

Valuation has room to re-rate further Acombinationofhighloangrowth,NIMexpansionandlowercreditcostwoulddriveastrong26%earningsCAGRforYesBankoverFY1417.Duringtheperiod,average RoA and RoE is estimated to be at impressive 1.7% and 21%respectively.Valuation isattractiveat2.3xFY17P/ABV inthecontextofrobustfundamentalsandimprovingoperatingenvironment.FinancialsummaryY/e31Mar(Rsm) FY14E FY15E FY16E FY17ETotaloperatingincome 44,378 54,933 68,921 86,876Yoygrowth(%) 27.7 23.8 25.5 26.1Operatingprofit(preprovisions) 26,880 32,360 40,705 51,605Netprofit 16,178 20,116 25,341 32,281yoygrowth(%) 24.4 24.3 26.0 27.4 EPS(Rs) 44.9 48.5 61.1 77.8Adj.BVPS(Rs) 196.8 280.1 329.0 391.7P/E(x) 19.7 18.2 14.4 11.3P/Adj.BV(x) 4.5 3.1 2.7 2.3ROE(%) 25.0 21.4 19.9 21.4ROA(%) 1.6 1.7 1.7 1.7

Source:Company,IndiaInfolineResearch

Best Broker of the Year by Zee Business for contribution to brokingNirmal Jain, Chairman, IIFL, received the award for The Best Broker of the Year (for contribution to broking in India) at India's Best Market Analyst Awards 2014 organised by the Zee Business in Mumbai. The award was presented by the guest of Honour Amit Shah, president of the Bharatiya Janata Party and Piyush Goel, Minister of state with independent charge for power, coal new and renewable energy.

'Best Equity Broker of the Year' Bloomberg UTV, 2011IIFL was awarded the 'Best Equity Broker of the Year' at the recently held Bloomberg UTV Financial Leadership Award, 2011. The award presented by the Hon'ble Finance Minister of India, Shri Pranab Mukherjee. The Bloomberg UTV Financial Leadership Awards acknowledge the extraordinary contribution of India's financial leaders and visionaries from January 2010 to January 2011.

'Best Broker in India' Finance Asia, 2011IIFL has been awarded the 'Best Broker in India' by Finance Asia. The award is the result of Finance Asia's annual quest for the best financial services firms across Asia, which culminated in the Country Awards 2011

Other awards

2012BEST BROKING HOUSE WITH

GLOBAL PRESENCE

2009, 2012 & 2013BEST MARKET

ANALYSTBEST BROKERAGE,

INDIAMOST IMPROVED,

INDIABEST BROKER,

INDIA

2009FASTEST GROWING

LARGE BROKING HOUSE

AnExpress Idea isarecommendationbasedonourviewonthesectorand/orstock fromaneartomediumtermperspective,typicallylessthanthreemonths.Theviewcanbebasedonfundamentalsand/ortechnicalparametersforthestockand/orourviewonthesectoronthewhole.

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e) IILhasotherbusinesssegments/divisionswithindependentresearchteamsseparatedby'chinesewalls'cateringtodifferentsetsofcustomershavingvaryingobjectives,riskprofiles,investmenthorizon,etcandtherefore,mayattimeshave,differentandcontraryviewsonstocks,sectorsandmarkets.

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including thesubjectcompany/iesmentioned in thisReport.However, IILencourages independence inpreparationof research reportandstrives tominimize conflict in preparation of research report. IIL and its associates did not receive any compensation or other benefits from the subjectcompany/iesmentionedintheReportorfromathirdpartyinconnectionwithpreparationoftheReport.Accordingly,IILanditsassociatesdonothaveanymaterialconflictofinterestatthetimeofpublicationofthisReport.

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(a) receivedanycompensation (except inconnectionwith thepreparationof thisReport) from the subjectcompany in thepast twelvemonths; (b)managedorcomanagedpublicofferingofsecuritiesforthesubjectcompanyinthepasttwelvemonths;(c)receivedanycompensationforinvestmentbankingormerchantbankingorbrokerageservicesfromthesubjectcompanyinthepasttwelvemonths;(d)receivedanycompensationforproductsorservicesotherthaninvestmentbankingormerchantbankingorbrokerageservicesfromthesubjectcompanyinthepasttwelvemonths;(e)engagedinmarketmakingactivityforthesubjectcompany.

i) IILanditsassociatescollectivelydonotown1%ormoreoftheequitysecuritiesofthesubjectcompany/iesmentionedinthereportasofthelastdayofthemonthprecedingthepublicationoftheresearchreport.

j) TheResearchAnalyst/sengagedinpreparationofthisReportorhis/herrelative

(a)doesnothaveanyfinancialinterestsinthesubjectcompany/iesmentionedinthisreport;(b)doesnotown1%ormoreoftheequitysecuritiesofthesubjectcompanymentionedinthereportasofthelastdayofthemonthprecedingthepublicationoftheresearchreport;(c)doesnothaveanyothermaterialconflictofinterestatthetimeofpublicationoftheresearchreport.

k) TheResearchAnalyst/sengagedinpreparationofthisReport:(a)hasnotreceivedanycompensation fromthesubjectcompany in thepasttwelvemonths; (b)hasnotmanagedorcomanagedpublicofferingofsecuritiesforthesubjectcompany inthepasttwelvemonths;(c)hasnotreceivedanycompensationfor investmentbankingormerchantbankingorbrokerageservices from thesubjectcompany in thepast twelvemonths; (d)hasnotreceivedanycompensation forproductsorservicesotherthaninvestment banking or merchant banking or brokerage services from the subject company in the past twelve months; (e) has not received anycompensationorotherbenefitsfromthesubjectcompanyorthirdpartyinconnectionwiththeresearchreport;(f)hasnotservedasanofficer,directororemployeeofthesubjectcompany;(g)isnotengagedinmarketmakingactivityforthesubjectcompany.

WesubmitthatnomaterialdisciplinaryactionhasbeentakenonIILbyanyregulatoryauthorityimpactingEquityResearchAnalysis.A graph of daily closing prices of securities is available at http://www.nseindia.com/ChartApp/install/charts/mainpage.jsp, www.bseindia.com andhttp://economictimes.indiatimes.com/markets/stocks/stockquotes.(Chooseacompanyfromthe listonthebrowserandselectthethreeyearsperiodinthepricechart).

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