YES Bank shares climb 3%; brokerage raises target price, maintains 'Sell' rating

Shares of YES Bank Ltd rose 3.24 per cent to hit a high of Rs 22.96 in Monday's trade, recovering from the previous session's decline following reports that Japan's Sumitomo Mitsui Banking Corporation (SMBC) has no immediate plans to increase its stake in the lender beyond the regulatory cap.

Brokerage Emkay Global Financial Services has raised its target price on YES Bank shares by 12 per cent to Rs 19 (from Rs 17) while maintaining a 'Sell' rating. The revision follows the private lender's September quarter (Q2 FY26) results announced on October 18.

According to Emkay, YES Bank's core profitability improved during the quarter, supported by stable margins and contained operating expenses. However, the profit after tax (PAT) of Rs 654 crore fell 16.4 per cent below estimates, with return on assets (RoA) at 0.6 per cent, affected by lower treasury gains and elevated provisions at 68 basis points (bps) of loans.

YES Bank's net profit grew 18.3 per cent year-on-year (YoY) to Rs 654 crore, while net interest income (NII) increased 4.6 per cent YoY to Rs 2,301 crore in the September 2025 quarter. Provisions rose 41 per cent YoY to Rs 419 crore, while asset quality remained stable, with both gross and net non-performing assets (NPAs) flat sequentially.

"Credit growth was relatively weak at 6 per cent YoY as retail growth remains slow. However, the management believes that corporate portfolio consolidation is largely complete, which should support better growth ahead," Emkay said. The brokerage added that better cost management and potential support from strategic stakeholder SMBC could help improve margins.

Emkay noted that asset quality remains a concern, with slippages at 2.1 per cent. The Board is in the process of appointing a new MD and CEO in consultation with SMBC. The brokerage expects earnings to decline 3 per cent for FY26E but rise 2–6 per cent for FY27–FY28E, projecting RoA to improve to 0.9–1.1 per cent over that period.