YES Bank is a good story in the private banking space. Its income has grown from Rs.1671.50 Cr in 2008 to Rs. 7164 Cr in 2012. Profit over the same period has increased from Rs. 200 Cr in FY2008 to Rs. 977 Cr. For the Q2, its income as well as profitability rose by 33%. It has been paying dividends since last 3 years consistently. The strong earnings momentum is expected to continue this year despite the overall bearish market sentiment. It has strong operating metrics, one of the best asset quality in the industry. NPA stands at 0.06% and NIM is at 2.8%. YES bank also received equity broking license from RBI and this would augur well for the bank in the long term.
From valuations perspective it is available at P/E of 13.29(CMP of Rs. 418 ) as against industry PE of 11.67. These valuations appear reasonable given the revenue / earnings that it is projecting for FY13. Investors should invest in this stock at the current levels and also accumulate on declines with a long term perspective to get decent returns.
