ICICI Securities Maintains Buy Recommendation for Yes Bank with a Target Price of Rs 21
Yes Bank Posts Strong Q4FY26 Results Amid Sectoral Pressure
Yes Bank (Yes) delivered a strong fourth quarter (Q4) of fiscal year 2026 (FY26), with notable improvements in net interest margin (NIM) and current account savings account (CASA) growth, along with a growth acceleration and reduced retail slippages and special mention account (SMA) loans. The bank's reported profit after tax (PAT) of INR 10.7 billion, a 45% year-over-year (YoY) increase, was in line with ICICI Securities' estimates, but significantly higher when adjusted for INR 3.4 billion of contingent provisions.
Despite sectoral pressure on NIM, Yes Bank stands out with a quarter-over-quarter (QoQ) and YoY uptick in NIM, largely due to a slower reduction in demand and time liabilities from refinance (RIDF) drag. The bank's RIDF has decreased to 6% of assets, and Yes Bank expects a further reduction to less than 5% by FY27. The bank aims to grow broadly in line with the system for FY27.
| Metric | Q4FY26 | FY26 | FY27E |
|---|---|---|---|
| Reported PAT (INR billion) | 10.7 | - | - |
| YoY PAT growth | 45% | - | - |
| Reported RoA | 1% | 0.8% | - |
| CASA growth | - | - | - |
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Yes Bank's strong CASA growth and decreasing RIDF drag are key factors in building a sharp NIM rise for FY27 and FY28. Although retail slippages have improved, they remain elevated at around 2.8% levels. The bank also expects reduced tailwinds from secured redemption (SR) recovery in FY27. ICICI Securities maintains a HOLD rating for Yes Bank with a revised target price of INR 21, based on an estimated 1.1x FY28E absolute book value (ABV) of INR 19.2 billion (vs. ~1.2x earlier).
The bank estimates a rise in return on assets (RoA) to around 1% (vs. 0.8% in FY26) with NIM expansion partly offset by higher operating expenses and reduced SR redemption. The bank's common equity tier 1 (CET 1) ratio stands at 13.8%, which is considered reasonable. ICICI Securities would await further progress on core profit per operating profit opportunity (PPOP) levels and core credit costs before revising its target price.
Investor Takeaway
ICICI Securities maintains a buy recommendation for Yes Bank with a target price of Rs 21.
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