ICICI Securities ups YES Bank stock target, predicts RoA rise.

Synopsis : YES Bank's shares fell 3.47%, reaching Rs 26.17 on BSE. ICICI Securities predicts a 24% potential downside, citing overvaluation concerns despite improved Q4 results.

YES Bank shares declined by 3.47% to settle at Rs 26.17 on BSE, with the stock market closed on Wednesday for Maharashtra Day. ICICI Securities' target indicates a potential downside of 24% for the stock.

According to ICICI Securities, YES Bank's Q4 results met profit expectations, with healthy sequential loan growth of 5% and strong deposit growth of 10% QoQ. Despite strengthening its balance sheet, profitability remains impacted by the Rural Infrastructure Development Fund (RIDF), accounting for 11% of assets.

The brokerage believes YES Bank is focusing on organic priority sector lending to alleviate RIDF burdens, improving yield and RoA trajectory. It forecasts RoA to increase sharply to 1% by FY26E from 0.3% in FY24, driven by NIM improvement and lower credit costs. However, valuation remains unattractive, with the stock trading at 1.9x/1.8x/1.6x FY24/FY25/FY26 ABV. They maintain a SELL rating, with a revised target price of Rs 20 from Rs 17.

JM Financial and Kotak Institutional Equities also advocate a 'sell' on YES Bank, citing overvaluation. JM Financial, with a target of Rs 18, noted asset quality improvement but emphasized overvaluation relative to potential medium-term benefits. Kotak Institutional Equities maintains a 'Sell', with an unchanged fair value of Rs 19, based on 1.2x book value and 13x estimated EPS.