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CMP 526.00
Target Price 589.00
ISIN: INE528G01019
JAN 17th
, 2013
YES BANK LTD Result Update: Q3 FY13
BUYBUYBUYBUY
Stock Data
Sector Banking
BSE Code 532648
Face Value / Div. Per Share 10.00
52wk. High / Low (Rs.) 535.00/278.15
Volume (2wk. Avg ) 348000
Market Cap ( Rs in mn ) 144454.24
Annual Estimated Results (A*: Actual / E*: Estimated)
Years FY12A FY13E FY14E
Net Income 63073.50 85149.23 106691.98
NII 24727.50 33198.46 41079.31
Net Profit 9769.90 12622.71 15573.08
EPS 27.68 35.30 43.55
P/E 14.60 11.44 9.28
Shareholding Pattern (%)
1 Year Comparative Graph
BSE SENSEX YES BANK LTD
Source: Company Data, Firstcall Research
SYNOPSIS
YES BANK, India’s new age private sector
Bank, is a state-of-the-art high quality,
customer-centric, service-driven Bank
catering to the “Future Businesses of India”.
Bank’s Capital Adequacy Ratio registered
at 18.00% as on 31.12.12.
CASA deposits grew by 74.9% y-o-y to Rs.
103408 mn taking the CASA ratio to 18.3%
as at December 31, 2012 up from12.6% as
of December 31, 2011.
Net profit for Q3 FY13 was up 34.72% to
Rs. 3423.10 mn as compared to Rs. 2540.90
mn for Q3FY12 driven primarily by
sustained & diversified revenue growth.
YES BANK added 12 branches across the
country during the quarter, taking the total
branch count to 412.
Total Deposits grew by 20.2% to Rs.
564005 mn as at December 31, 2012 from
Rs.469291 mn as at December 30, 2011.
YES BANK has partnered with American
Express to offer a credit card to retail and
micro SME customers.
Net Income and PAT of the company are
expected to grow at a CAGR of 38% and
29% over 2011 to 2014E respectively.
Peer Groups CMP Market Cap EPS P/E (x) P/BV(x) Dividend
Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)
Yes Bank 526.00 144454.24 27.68 14.60 2.43 40.00
ICICI Bank 1173.05 1354064.60 64.17 18.29 2.24 165.00
Axis Bank 1415.05 604062.10 114.5 12.32 2.65 160.00
SBI 2439.00 1638558.40 219.40 11.13 1.95 350.00
Investment Highlights
Results updates- Q3 FY13,
The company’s net profit jumps to Rs. 3423.10 million as against Rs. 2540.90 million in the corresponding
quarter ending of previous year, an increase of 34.72%. Revenue for the quarter rose 26.70% to Rs. 21336.40
million from Rs. 16840.60 million, when compared with the prior year period. Reported earnings per share of the
company stood at Rs. 9.57 a share during the quarter, registering 32.60% an increase over previous year period.
Net Interest Income is Rs. 8975.10 millions as against Rs. 6390.10 millions in the corresponding period of the
previous year.
Months Dec-12 Dec-11 % Change
Net Income 21336.40 16840.60 26.70%
PAT 3423.10 2540.90 34.72%
EPS 9.57 7.22 32.60%
Segment Revenue
Particulars (Rs.mn.) Q3 FY13
Wholesale Banking 15777.20
Treasury Operations 7312.90
Retailing Banking 1088.70
Other Banking Operations 56.80
Total 24235.60
Latest Updates
• Current and Savings Account (CASA) deposits grew by 74.9% y-o-y to Rs. 103408.00 mn taking the CASA
ratio to 18.3% as at December 31, 2012 up from 12.6% as of December 31, 2011.
• The Savings Account deposits grew by 307.8% y-o-y to Rs. 49048.00 mn as of December 31, 2012 and the
Current Account deposits grew by 15.4% to Rs. 54360.00 mn as of December 31, 2012.
• Total Deposits grew by 20.2% to Rs. 564005.00 mn as at December 31, 2012 from Rs. 469291.00 mn as at
December 31, 2011. The Bank’s Total Assets grew by 22.4% to Rs. 870173.00 mn as at December 31, 2012
from Rs. 711091.00 mn as at December 31, 2011.
• Allotment of Shares
Yes Bank Ltd has allotted 5,13,050 equity shares of face value of Rs. 10/- each on January 04, 2013 under the
Joining Employee Stock Option Plan-Ill (JESOP-Ill), YBL ESOP and YBL JESOP V/PESOP-II.
• Retail Products
� YES BANK launched Insta Online Savings Account, through which a Savings Account can be opened from the
comfort of home or office. Additionally, one can even pick an Account Number of choice.
� YES BANK in collaboration with American Express offered American Express Cards to its valued customers,
with multiple benefits including the industry leading Membership Rewards program, best in class service and
access to a worldwide network of millions of merchants across 200 countries. These cards are currently
being offered from YES BANK’s branches in seven cities.
Expansion/ Investment Initiatives
� YES BANK YES BANK has a total of 412 branches across the country as on December 31, 2012.
� YES BANK added 29 ATMs to its network during the quarter, taking the total count to 723 ATMs as on
December 31, 2012.
� Employee strength stood at 6,532 as on December 31, 2012; an increase of 30% over December 31, 2011.
Awards & Recognitions
� YES BANK was awarded The Strongest Bank in India by the Asian Banker, a leading publication in Asia Pacific
based out of Singapore
� YES BANK was adjudged the Best Midsized Bank by the Business Today-KPMG study 2012
� YES BANK was awarded the Best Bank (Mid-Size) by the Businessworld Best Bank Awards
� YES BANK was awarded the Golden Peacock Global Award for Sustainability, 2012 at the London Global
Convention and Golden Peacock Awards presentation.
� YES BANK won the IPE Corporate Excellence Award – Banking and Finance 2012
� YES BANK won the Dataquest Emerging Leaders in Business Technology 2012 at DQ Live Awards
� YES BANK, won the Customer Centric Brand Award, Sustainable Marketing Excellence Award and Cause
Related Marketing Award, at the Zee Brand Excellence Award (BFSI Sector)
� YES BANK was conferred with the “Best Overall Mobile Lifeline Launch” award at Connected World Forum
Awards in Dubai.
Knowledge Initiatives
� YES BANK was the Knowledge Banking Partner for the India Pension Fund Congress 2012 held in Mumbai.
� YES BANK was a Knowledge Partner to the YPO Congress in Kolkata.
� YES BANK was the Knowledge Partner for the 8th ASSOCHAM Annual Banking Summit – ‘Poised for Explosive
Growth’.
Company Profile
YES BANK, India’s new age private sector Bank, is a state-of-the-art high quality, customer-centric, service-driven
Bank catering to the “Future Businesses of India”. An outcome of the professional & entrepreneurial commitment
of its Promoter & Founder, Dr. Rana Kapoor and his top management team, YES BANK is India’s fourth largest
private sector bank (by balance sheet dated March 31, 2012).
Since its inception in 2004, YES BANK has fructified into a ‘“Full Service Commercial Bank” that has steadily built
Corporate and Institutional Banking, Financial Markets, Investment Banking, Corporate Finance, Branch Banking,
Business and Transaction Banking, and Wealth Management business lines across the country, and is well
equipped to offer a range of products and services to corporate and retail customers. YES BANK has adopted
international best practices, the highest standards of service quality and operational excellence, and offers
comprehensive banking and financial solutions to all its valued customers. Today, YES BANK has a widespread
branch network of over 400 branches across 275 cities, with 700+ ATMs and 2 National Operating Centers in
Mumbai and Gurgaon.
YES BANK has been recognized amongst the Top and Fastest Growing Banks in various Indian Banking League
Tables by prestigious media houses and Global Advisory Firms, and has received several national and
international honors for our various Businesses including Corporate Finance, Investment Banking, Treasury,
Transaction Banking, and Sustainable practices through Responsible Banking. The Bank has received numerous
recognitions for its world-class IT infrastructure, and payments solutions, as well as excellence in Human Capital.
The sustained growth of YES BANK is based on the key pillars of Growth, Trust, Technology, Human Capital,
Transparency & Responsible Banking. YES BANK has a knowledge driven approach to banking, and a superior
customer experience for its retail, corporate and emerging corporate banking clients. As the Professionals’ Bank
of India, YES BANK has exemplified ‘creating and sharing value’ for all its stakeholders, and has created a
differentiated Banking Paradigm with the vision of ‘Building the Best Quality Bank of the World in India by 2015.
Services Offered
� Corporate Banking
� Corporate & Institutional Banking
� Emerging Corporate Banking
� Government Relationship Management
� Indian Financial Institutions
� International Banking
� Investment Banking
� Corporate Finance
� Financial Markets
� Transaction Banking
� Financial Inclusion Service
� Multinational Corporate & Embassies
� Branch Banking
Under the aegis of Branch Banking, we offer innovative financial products that include:
� Savings Accounts with multiple variants designed to suit an individual’s banking needs
� Current Accounts with innovative & flexible features to suit business requirements, including Trade, Forex &
Cash Management Solutions
� Non-resident Accounts with multiple variants for the Global Indian
� Fixed Deposits offering best in class interest rates.
� Smart Salary Accounts: An innovative Corporate Salary Programme, backed by superior technology that
enables convenience and direct access.
� Retail Banking Loan: A bouquet of products that have been exclusively created exhibiting our high quality
services and faster turnaround time driven by technological platform.
� Knowledge Banking
YES BANK has a knowledge driven approach to banking, and a superior customer experience for its retail,
corporate and emerging corporate banking clients. YES BANK focuses on key sectors such as Food and
Agribusiness, Healthcare, Life Sciences, Media & Entertainment, Telecommunication, IT, Infrastructure and
Retailing amongst others, which are the Future Businesses of India.
� Responsible Banking
Responsible Banking is one of the key differentiators of YES BANK with the objective of developing
innovative business solutions to social and environmental problems. It comprises of three special business
verticals with products aligned to our sustainability strategy, identifying new markets and promoting
sustainable development. YES BANK has successfully established three dedicated business verticals;
� AGRIBUSINESS RURAL & SOCIAL BANKING (ARSB): ARSB develops innovative financial models, which
leverage the outreach of various stakeholders in the agri value chain, to overcome the 'last mile challenges' in
the agri and rural sector. It also works closely with insurance and re-insurance companies to facilitate the
development and distribution of need-based insurance products for the agri-sector. As a Social Banking
initiative, the team provides financial services to the social sector and to socio-economically disadvantaged
sections of society.
� MICROFINANCE: YES BANK is committed to creating equal financial opportunities and enabling financial
inclusion. The Bank provides term lending and direct lending, a two-pronged solution to provide easy access
to suitable financial products and services to un-Banked/under-Banked, low-income communities across
urban and rural India.
� SUSTAINABLE INVESTMENT BANKING (SIB): The Bank has established a dedicated business vertical that
addresses the need for specialist investment advisory in sustainable ventures such as Social, Alternative
Energy and Environment.
� PRIVATE EQUITY (PE): As India fast becomes the most favored emerging market for foreign investments, the
economic, political and regulatory climate for private equity investors has become encouraging.
Strategic Alliances
YES BANK and Export-Import Bank of Malaysia Berhad (EXIM Bank), entered into a Master Facility Agreement
for USD 100 Million bank-to-bank trade finance facility to facilitate ongoing trade finance transactions between
YES BANK and its importing customers.
Financial Highlight
Balance Sheet
(A*- Actual, E* -Estimations & Rs. In Millions)
FY11 FY12 FY13E FY14E
CAPITAL AND LIABILITIES
Capital 3471.47 3529.87 3575.60 3575.60
Reserves and Surplus 34469.28 43236.48 55859.21 71432.29
Deposits 459389.31 491517.05 521008.07 552268.56
Borrowings 66909.09 141564.87 246322.87 389190.14
Other Liabilities and Provisions 25830.72 56772.82 102191.08 167593.36
Total 590069.87 736621.09 928956.83 1184059.95
ASSETS
Cash and Balances with Reserve Bank of India 30760.16 23325.44 24025.20 24745.96
Balances with Banks and Money at Call and Short notice 4199.61 12529.97 22773.38 38347.98
Investments 188288.37 277573.49 385827.15 524724.93
Advances 343636.38 379886.41 425472.78 480784.24
Fixed Assets 1324.29 1771.03 2320.05 3054.08
Other Assets 21861.06 41534.75 68538.27 112402.76
Total 590069.87 736621.09 928956.83 1184059.95
Annual Profit & Loss Statement for the period from 2011 to 2014E
Value(Rs.in.mn) FY11 FY12 FY13E FY 14E
Description 12m 12m 12m 12m
Net Income 40417.40 63073.50 85149.23 106691.98
Other Income 6232.70 8571.20 11485.41 13552.78
Total income 46650.10 71644.70 96634.63 120244.76
Interest Expended -27948.20 -46917.20 -63436.17 -79165.45
Net Interest Income 18701.90 24727.50 33198.46 41079.31
Operating Expenses -6798.10 -9325.30 -13198.13 -16430.56
Operating Profit 11903.80 15402.20 20000.33 24648.75
Provisions and Contingencies -982.10 -902.10 -1300.02 -1577.52
Profit Before Tax 10921.70 14500.10 18700.31 23071.23
Tax -3650.40 -4730.20 -6077.60 -7498.15
Profit After Tax 7271.30 9769.90 12622.71 15573.08
Equity Capital 3471.50 3529.90 3575.60 3575.60
Reserves 34469.30 43236.50 55859.21 71432.29
Face Value (Rs.) 10.00 10.00 10.00 10.00
EPS 20.95 27.68 35.30 43.55
Quarterly Profit & Loss Statement for the period from 30 June 2012 to 31 Mar 2013E
Value(Rs.in.mn) 30-Jun-12 30-Sep-12 31-Dec-12 31-Mar-13E
Description 3m 3m 3m 3m
Net Income 18863.40 19863.70 21336.40 22829.95
Other Income 2881.00 2767.60 3131.90 3570.37
Total income 21744.40 22631.30 24468.30 26400.31
Interest Expended -14141.50 -14622.10 -15493.20 -16780.01
Net Interest Income 7602.90 8009.20 8975.10 9620.30
Operating Expenses -3006.80 -3161.80 -3340.60 -3629.96
Operating Profit 4596.10 4847.40 5634.50 5990.34
Provisions and Contingencies -300.10 -317.30 -566.80 -461.26
Profit Before Tax 4296.00 4530.10 5067.70 5529.08
Tax -1394.60 -1469.30 -1644.60 -1794.19
Profit After Tax 2901.40 3060.80 3423.10 3734.90
Equity Capital 3539.60 3561.10 3575.60 3575.60
Face Value (Rs.) 10.00 10.00 10.00 10.00
EPS 8.20 8.60 9.57 10.45
Ratio Analysis
Particulars FY11 FY12 FY13E FY14E
EPS (Rs.) 20.95 27.68 35.30 43.55
Operating Profit Margin (%) 29.45% 24.42% 23.49% 23.10%
PAT Margin (%) 17.99% 15.49% 14.82% 14.60%
P/E Ratio (x) 19.29 14.60 11.44 9.28
ROE (%) 19.16% 20.89% 21.24% 20.76%
ROCE (%) 0.54% 0.60% 0.67% 0.72%
Book Value (Rs.) 109.29 132.49 166.22 209.78
P/BV (x) 3.70 3.05 2.43 1.93
Charts
Outlook and Conclusion
According to the RBI's 'Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks', September
2011, Nationalized Banks, as a group, accounted for 52.2 per cent of the aggregate deposits, while State Bank of
India (SBI) and its associates accounted for 21.8 per cent.
� At the current market price of Rs.526.00, the stock P/E ratio is at 11.44 x FY13E and 9.28 x FY14E
respectively.
� Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs. 35.30 and
Rs.43.55 respectively.
� Net Income and PAT of the company are expected to grow at a CAGR of 38% and 29% over 2011 to 2014E
respectively.
� On the basis of Debt-Equity Ratio, the stock trades at 49.18 x for FY13E and 44.81 x for FY14E.
� Price to Book Value of the stock is expected to be at 2.43 x and 1.93 x for FY13E and FY14E respectively.
� We expect that the company will keep its growth story in the coming quarters also. We recommend ‘BUY’ in
this particular scrip with a target price of Rs. 589.00 for Medium to Long term investment.
Industry Overview
India has a robust banking system, governed by stringent regulations. An intense supervision by the Reserve
Bank of India (RBI) has resulted in stringent regulatory and compliance requirements on capital adequacy & risk
management practices which have strengthened the overall banking system in India.
India’s banking sector includes 86 scheduled commercial banks, 82 regional rural banks, 1,645 urban
cooperative banks (53 scheduled cooperative banks) and 95,765 rural cooperative banks.
Key Statistics
• According to RBI’s ‘Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks’, December
2011, Nationalised Banks, as a group, accounted for 52.1 per cent of the aggregate deposits, while State Bank
of India (SBI) and its associates accounted for 21.9 per cent. The share of New Private Sector Banks, Old
Private Sector Banks, Foreign Banks, and Regional Rural Banks in aggregate deposits was 13.9 per cent, .8
per cent, 4.5 per cent and 2.9 per cent, respectively.
• Nationalised Banks also held the highest share of 51.2 per cent in the total bank credit followed by SBI and its
associates at 22.5 per cent and New Private Sector Banks at 13.8 per cent. Foreign Banks, Old Private Sector
Banks and Regional Rural Banks had shares of around 5.2 per cent, 4.8 per cent and 2.5 per cent, respectively.
• Another statement released by RBI revealed that banks' advances grew 0.1 per cent to US$ 913 billion in July-
September 2012, while deposits expanded by 1 per cent. The RBI projects credit growth at 17 per cent and
deposit growth at 16 per cent in 2012-13.
• Foreign exchange reserves stood at US$ 294.81 billion for the week ended September 28, 2012 wherein the
value of gold reserves was recorded at US$ 28.133 billion and that of foreign currency assets (FCAs) was at
US$ 259.96 billion.
Recent Developments
• Export-Import Bank of India (Exim Bank) has partnered with IL&FS Financial Services (IFIN) to facilitate
accessibility to Indian companies for CNH bond markets as well as other international bond markets which
are not dominated in US Dollar, Euro and Yen. The memorandum of understanding (MoU) gives broad
clauses of co-operation between the two entities on a bond guarantee facility programme which will facilitate
a credit enhancement mechanism to Indian bond issuers in international bond markets.
• Working further on its innovation finance programme for the micro, small and medium enterprises (MSME)
sector, Small Industries Development Bank of India (SIDBI) has entered into a EUR 53 million (US$ 68.53
million) - loan agreement with KFW Germany. SIDBI aims to promote entrepreneurial innovations in MSME
sector, particularly those involved in clean technologies. The scheme also aims to provide financing
instruments specially customised to the needs of the MSMEs.
• India’s second largest private bank HDFC Bank has opened its first representative office in Abu Dhabi to
render financial services to a large customer base of non-resident Indians (NRIs) staying in the UAE. The new
office will help NRIs open accounts in India and will also offer remittance services, fixed deposits and other
related banking services.
• IDBI Bank has received internationally recognised BS 25999 certificate from Intertek India, a global
certification agency. The bank has become India’s first public sector bank to get certified for its business
continuity management (BCM) process, for comprehensive coverage of major business and support
functions. The honor clearly authenticates bank’s dedication towards customer satisfaction, quality of
services, better performance and regulatory compliance.
• The State Bank of Bikaner & Jaipur (SBBJ) has opened a unique and first-of-its kind financial supermarket in
the city. The branch, which will not be a conventional one, will offer a wide range of diversified products and
services. It will primarily aim at cross-selling by offering non-standard products such as insurance (both life
and general), credit card and mutual funds. The supermarket will sell products of its channel partners
namely SBI Life, Mutual Fund, SBI General and SBI Card, both across the counters and through electronic
means.
• India’s third largest private bank – Axis Bank – has entered into a strategic agreement with Tata AIG General
Insurance wherein the latter would be its corporate agent for general insurance. Tata AIG will leverage on
bank’s wide distribution network to offer general insurance solutions to its clients. This initiative by Axis
Bank aimed at broadening insurance cover options while offering Tata AIG’s proclaimed Customer and
Claims service to its' customers across the country.
Government Initiatives
In order to speed up the process of financial inclusion in India, the RBI has announced setting up of a high-level
committee that would ensure accessible financial services in the country.
The Financial Inclusion Advisory Committee, to work under RBI Deputy Governor K C Chakrabarty, would
formulate suitable regulatory framework to align the twin objectives of financial inclusion and financial stability.
The 11-member panel is expected to acknowledge issues such as developing feasible and sustainable banking
services delivery models and devising products and processes for rural as well as urban consumers outside the
banking network.
About 58.7 per cent households are reported to be availing banking facilities, as per 2011 census.
Road Ahead
Indian banking industry is anticipated to grow exponentially and become the world’s third largest in asset size
(projected at US$ 28,500 billion from the current US$ 1,350 billion) by 2025, according to a report by the Boston
Consulting Group (BCG) India, prepared in association with a leading industry organisation and Indian Banks
Associations (IBA). Driven by 3G and smartphones, mobiles would emerge as the most preferred mediums for
banking wherein they will account for almost 20-30 per cent of the transactions.
Disclaimer:
This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale
of any financial instrument or as an official confirmation of any transaction. The information contained herein is
from publicly available data or other sources believed to be reliable but do not represent that it is accurate or
complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s affiliates shall
not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the
information contained in this report. This document is provide for assistance only and is not intended to be and must
not alone be taken as the basis for an investment decision.
Firstcall India Equity Research: Email – [email protected]
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