The YES Bank share price rose in trade today after Deutsche Bank raised price target for the stock projecting better outlook for the private sector lender. YES Bank share price rose 4% to 254 level compared to the previous close of 244.35 on BSE. YES Bank share price has been rising for the last two days and gained 6% during the period.
YES Bank share price has fallen 21.46% during the last one year and gained 37.80% since the beginning of this year. Deutsche Bank said things are falling in place for the private sector lender. It sees likely softer earnings for the bank, but their quality is set to improve.
The brokerage also expects corporate loan growth to slow down to 12-15%, even as retail/SME should grow at 40-50% helping to rebalance portfolio. Net interest margins are expected to hold up well for the lender. The stock can be bought with a target price of Rs 300.
Interestingly, global financial services firm CGS-CIMB Securities too has given a target price of Rs 300 for the private sector lender. In the beginning of March, CGS-CIMB Securities said concerns over asset quality and top management have decreased.
Additionally, NIL divergence report of RBI and appointment of MD & CEO will result in a re-rating since valuations are attractive at 1.5 times FY20 forward price to earnings /book value. YES Bank's new MD and CEO Ravneet Gill also took charge from March 1 for a tenure of three years. Since then, the stock has gained 7% on BSE.
On February 14, the RBI cleared the bank of any disparity in reporting of the bad loan data. The Reserve Bank of India (RBI) assesses compliance by banks with extant prudential norms on income recognition, asset classification and provisioning (IRACP) as part of its supervisory processes. Since then, the stock has risen from 221 level to 254 level logging a 14.93% rise in the share price of the private sector lender.
"As part of this process, Yes Bank has received the risk assessment Report for 2017-2018. The report observes NIL divergences in the bank's asset classification and provisioning from the RBI norms," the bank said.
Later, RBI warned YES Bank of regulatory action for disclosure of nil divergence report in violation of the confidentiality clause. Following the announcement by the private lender on February 14, that the RBI's Risk Assessment Report (RAR) had not found any divergence in asset classification and provisioning for 2017-18, the stock price for the bank skyrocketed 30 per cent.
On February 15, the bank disclosed the RBI had criticised the lender saying it was an attempt to "mislead the public" and the RAR had "identified several other lapses and regulatory breaches".
Edited by Aseem Thapliyal