JM Financial reinstates coverage on YES Bank. Here's is summary what they say

 

Shares of 

YES Bank

 NSE 0.30 % trade at 1.2 times FY24 book value per share, which adequately captures all the positives, said 

JM Financial

 NSE -0.46 % as it resumed coverage on the stock with a 'hold' rating and a target of Rs 16.

JM Financial said the lender's strategy to make the loan book more granular is a step in the right direction, with retail and MSME forming 62 per cent of the book as of June 2022 against 44 per cent in FY20. The corporate book has fallen to 38 per cent against 56 per cent in FY20.

It expects growth momentum in the retail and MSME segments to continue but subdued growth in the corporate segment should keep loan growth limited to 12 per cent in FY23 and 15 per cent each in FY24 and FY25. ES Bank is a widely tracked stock, as 26.14 per cent of the lender's stake is with individuals owning less than Rs 2 lakh worth of shares. HNIs account for another 7.96 per cent stake in the private lender as of June 30.
                          "We expect return metrics to expand gradually and build in RoA of 0.4 per cent/0.6 per cent/0.8 per cent and RoE of 3.4 per cent/5.0 per cent/6.9 per cent in FY23E/24E/25E driven by improvement in margins, sustained momentum in fee income, and lower credit costs," said JM Financial.

                              The brokerage said the transfer of Rs 48,000 crore worth of stressed assets to an ARC will reduce the on-balance sheet stress and free up management bandwidth, which can now be used to drive incremental growth. JM Financial expects future credit costs to be limited to 0.9 per cent each in FY23 and FY24 and 0.8 per cent in FY25 on account of continued strong resolution momentum and moderation in slippages.