Yes Bank can test Rs 327: Motilal Oswal

by khalid on 07/12/2009 · 0 comments

yes bank

Motilal Oswal is bullish on Yes Bank and has recommended buy rating on the stock with a target of Rs 327, in its November 30, 2009 reports.

“Despite 76% CAGR in assets over FY06-09, Yes Bank’s market share is a mere 0.55% as of September 2009. Rapid branch network expansion, acquisition of new customers and deepening of existing customer relationships would help ensure that its asset growth remains higher than industry. With likely capital raising in next one year (we have factored in USD 235 million at Rs 250 per share), tier-I CAR would improve to ~12% and support asset growth over the next 2-3 years. We expect loan CAGR of 37% and PAT CAGR of ~32% over FY09-12.”

“We expect RoA of 1.5%+ and RoE of 17%+ over the next three years, despite equity dilution. Given the superior return ratios, superlative growth and a competent management, we believe Yes Bank deserves premium valuations. The stock trades at 2.3x FY11E BV and 15.7x FY11E EPS. We initiate coverage with a Buy recommendation and a target price of Rs 327 (3x FY11E BV).”

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