YES Bank shares: Stock analysts up target prices but retain 'Sell' rating; here's why

Domestic brokerages including Emkay Global Financial Services and Kotak Institutional Equities have increased their price targets on YES Bank shares after the lender announced its earnings for the June 2024 quarter. However, they have maintained their 'sell' rating on the stock. ICICI Securities, which has the highest target on the stock, has kept the same rating with unchanged target price.

YES Bank reported a 59 per cent year-on-year (YoY) jump in net profit to Rs 801 crore in June 2025 quarter, compared to Rs 502 crore in the same quarter last year. The private lender's net interest income (NII) grew 5.7 per cent YoY to Rs 2,371 crore, while non-interest income surged 46.1 per cent to Rs 1,752 crore for the quarter.

YES Bank's core performance remained weak, with credit growth slowing to 5 per cent YoY, while margins remained low at 2.5 per cent. However, higher treasury gains led to an earnings beat, with PAT at Rs 800 crore and RoA at 0.7 per cent. NIM held steady at 2.5 per cent, aided by a reduction in RIDF deposits and the recent SA/TD rate cuts, though partially offset by adverse asset repricing, said Emkay Global.

"However, the bank expects NIM to slip in 2Q due to lending rate cuts. Yes’s retail portfolio continues to exhibit stress with a slippage ratio of 2.5 per cent, which we believe had led to management churn. Recently, SMBC agreed to acquire a 20 per cent stake from SBI and other banks at a sale price of Rs 21.5 per share. However, the transaction is still pending RBI approval," it said.

Factoring in the 1Q beat, Emkay revised up FY26E EPS by 5 per cent and in turn its target by 6 per cent to Rs 17 from Rs 16. However, it retained a 'sell' rating , given sub-par growth/return ratios and higher valuations.

Although YES Bank's provisions rose 34 per cent YoY to Rs 284 crore, they declined sequentially, providing some relief to investors. The bank maintained stability, with gross non-performing assets (NPAs) ratio flat at 1.60 per cent and net NPA at 0.30 per cent, as of June 30, 2025.

Shares of YES Bank settled at Rs 20.16 on Monday, falling marginally. The total market capitalization of the counter stood slightly above Rs 63,200 crore mark. The stock is currently down 26 per cent from its 52-week high at Rs 27.20 hit in July 2024.

Yes Bank has reported stable NIM QoQ. While opex and credit costs declined QoQ, RoA was flattish due to lower other income (MTM loss). Post the warrant conversion, CET 1 stands at 13.3 per cent. Operating parameters have been on an improving trajectory though RoA remains burdened by bulky RIDF investment, said ICICI Securities in its note.

"The bank is making concerted efforts in organic PSL origination, which should ease incremental RIDF burden, aiding yields and RoAs. This, coupled with easing credit costs, could improve RoA to 0.7/1.0 per cent by FY25/26E. However, current valuation at 1.5 times FY26E ABV seems to adequately capture the turnaround," it added with a 'sell' rating and a target price of Rs 20 apiece.

YES Bank reported 60 per cent YoY earnings growth in Q1FY26, led by 50 per cent YoY operating profit growth, but offset by 35 per cent YoY increase in provisions. A flat NIM was a surprise, aided by lower PSL charges and cuts to savings rates. Slippage ratio at 2.4% was driven by retail loans, but we are well past the peak of worry in this portfolio, said Kotak Institutional Equities.

"Levers to improve RoE remain the same but the improvement is likely to be gradual, as we have maintained in the past. We maintain 'sell' rating with an fair value of Rs 18 (from Rs17 earlier), as valuations remain expensive," it added.