YES Bank, ICICI Bank or Kotak Mahindra Bank: Where to invest post Q1 results?

Analysts on Dalal Street retained a mixed view on private sector lenders, YES Bank, ICICI Bank and Kotak Mahindra Bank, post-June quarter results. Shares of YES Bank traded 4.42 per cent lower at Rs 14.06 in the morning trade at around 11.15 am (IST) on Monday. On the other hand, the benchmark BSE Sensex was down 481 points, or 0.86 per cent at 55,590
 
YES Bank on Saturday reported a 50.17 per cent year-on-year (YoY) growth in net profit at Rs 310.63 crore against Rs 206.84 crore in the same quarter last year.
 
Brokerage Nirmal Bang Securities maintained a ‘Sell’ rating on YES Bank with a target price of Rs 13.40. “Despite the overall better-than-expected results and an improving overall picture at the bank, we find medium-term ROA targets unattractive given the investable opportunities available with larger banks,” the brokerage said.
 
On the other hand, ICICI Securities maintained a ‘Hold’ rating on YES Bank with a target price of Rs 14. “We do see a turnaround in relevant operating metrics and improved confidence in the stability of the franchise. Nonetheless, we remain cognizant of risks arising from delay in resolution of the stress pool, net labelled exposure of 5 per cent, modest RoE profile during transition and supply overhang post the expiry of lock-in shares,” ICICI Securities said.
 
Kotak Mahindra Bank reported a 26 per cent rise in its net profit to Rs 2,071.15 crore in the first quarter of the current fiscal year aided by a fall in bad loans. Shares of the lender traded 1.76 per cent down at Rs 1,794.25 in the morning trade.
 
Brokerage Motilal Oswal Financial Services retained a ‘Neutral’ view on Kotak Mahindra Bank with a target price of Rs 2,000. On the other hand, JM Financial has a ‘Buy’ rating on Kotak Mahindra Bank with a target price of Rs 2,000.
 
“We believe success on deposit momentum with continued strong risk-adjusted margins will drive Kotak’s outperformance incrementally and sustain its premium valuations,” JM Financial said in a report.
 
The country’s second biggest private sector lender ICICI Bank on Saturday also posted a 50 per cent year-on-year (YoY) rise in profit after tax at Rs 6,905 crore as against Rs 4,616 crore in the same quarter last year. JM Financial also retained a ‘Buy’ call on ICICI Bank with a target price of Rs 1,000. Shares of the lender traded 0.21 per cent down at Rs 798.30 at around 11.25 am (IST).
 
“ICICI bank reported another strong quarter with robust growth performance, steady operational performance and improving asset quality. We see ICICI Bank delivering strong compounding returns with valuations set to re-rate higher. ICICI Bank continues to be our top pick in the sector,” JM Financial said.

Also read: ICICI Bank Q1 Results: Net profit up 50% YoY to Rs 6,905 cr; NII jumps 21% to Rs 13,210 cr

Also read: Yes Bank Q1 profit rises 50% at Rs 311 crore

Also read: Kotak Mahindra Bank Q1 profit rises 26% to Rs 2,071 crore