Yes Bank is a leading private sector bank in the indian banking industry and has been delivering steady and stable growth of more than 30 percent from past few years . the bank is very ably managed by Mr Rana kapoor and hence the results which show least npas . the bank has already posted a eps of 17 rs for the half year and is expected to post a total year earning of about 35-38 rs . hence awarding a avg PE multiple of 15 to the stock the price comes out to be in the range of 525-570. On the technical front the stock has made new high for itself and is poised for new highs in favourable market conditions . one can go long on cmp for a tgt price of 450 and a stop loss of 400. also the obv shows new highs in waiting . charts can be assesed at nseindia.com
*axis bank has been in news recently for assest quality concerns and provisions for the same . the market seems to be valuing high the other two cause of no such assest quality concerns arising
Considering this above I think Axis’s asset quality is decent enough and concerns raised in the media are blown out of proportion. Valuation wise it looks good. The leadership of Shika Sharma has been impressive so far.
I will take a position in Yes Bank only after I see how its retail expansion progresses and CASA improves. Not convinced that they can handle it as well as the others mentioned above.
In one of our college conclaves, I had the privilege of interacting with a SVP from Axis Bank. Apart from everything else, one of his comments was critical. He said, Axis bank is at best old wine in a new bottle. There are drawbacks from their old legacy (read UTI days) that they are still dragging on.
The point is one Sikha Sharma at the top doesn’t change the core. Axis can never be as aggressive or as progressive as a HDFC/ICICI / Kotak/Yes Bank. I am not commenting on their financials or numbers. But the fact remains that it is trying to run the private banks race with an old framework and bureaucracy in its orders.
Note I am not discouraging you on Axis bank, but painting the numbers of Axis with the same brush as that of ICICI or HDFC may not be right.
Coming back to Yes Bank, I believe Yes and Kotak were most prepared for savings interest deregulation and really played their cards well to capture the incremental CASA growth. What Yes has achieved in course of less than one decade is really commendable. Yes was and still is a SME lender, most big bankers use to consider it as a NBFC rather than a bank (!!!) due to its poor CASA earlier. But they have clearly marked their potential in the last few quarters and shows huge potential in terms of fee income and other incentives.
It has successfully increased NIMS, improved CASA, maintained asset quality with adequate provisions. Overall with Rana Kapoor at the helm the future from this low base does look promising.
I agree with your view on Axis. The point about Shika Sharma having an uphill task due to the old guard is valid but should not be a major constraint for a determined management.
The nos pointed to a short term undervaluation when I bought it at 1020 around 2 months back. NPA of ICICI is 3.5 compared to 1.1 of Axis. CASA is same for both. Infact most nos establish that its more closer to the pvt bank segment than PSBs.
Fee income will only increase due to the brokerage business addition. I got excellent feedback from the home loan market about their scaling up business and giving a tough fight to HDFC Ltd. The superior growth in retail lending augurs well.I think it will give me good returns for FY-13.
Yes Bank is looking quite interesting. I am thinking I’ll buy when I see a little more traction in the retail segment and am also trying to get some feedback from the market. I’ll have a re-look.
