10 April 2017
Market snapshot
Equities - India
Close
Chg .%
Sensex
29,707
-0.7
Nifty-50
9,198
-0.7
Nifty-M 100
17,398
-0.4
Equities-Global
Close
Chg .%
S&P 500
2,356
-0.1
Nasdaq
5,878
0.0
FTSE 100
7,349
0.6
DAX
12,225
0.0
Hang Seng
10,274
0.0
Nikkei 225
18,665
0.4
Commodities
Close
Chg .%
Brent (US$/Bbl)
54
0.3
Gold ($/OZ)
1,254
0.2
Cu (US$/MT)
5,799
-0.5
Almn (US$/MT)
1,947
0.4
Currency
Close
Chg .%
USD/INR
64.3
-0.4
USD/EUR
1.1
-0.5
USD/JPY
111.1
0.3
YIELD (%)
Close
1MChg
10 Yrs G-Sec
6.8
0.1
10 Yrs AAA Corp
8.0
0.1
Flows (USD b)
7-Apr
MTD
FIIs
0.0
0.2
DIIs
0.1
0.1
Volumes (INRb)
7-Apr
MTD*
Cash
325
305
F&O
3,040
3,890
Note: YTD is calendar year, *Avg
YTD.%
11.6
12.4
21.2
YTD.%
5.2
9.2
2.9
6.5
9.4
-2.4
YTD.%
-2.1
8.9
5.0
14.3
YTD.%
-5.4
0.7
-5.0
YTDchg
0.3
0.4
YTD
6.8
0.3
YTD*
278
4,421
Today’s top research theme
YES BANK:
Re-rating led by diversification and balance sheet granularity
Robust capitalization | 2x+ system growth | Best-in-class return ratios
v
Recent capital raise of INR49b has added ~300bp to YES’ CET1 (~13%). With
incremental market share of 3.5%+, aggressive roll-out of retail/SME products
and strong corporate relationships, will drive loan CAGR (FY17-20) of 28%.
v
We expect balance sheet granularity to increase led by higher share of retail
loans (45% by FY20) and CASA ratio improvement (40% by FY20) owing to
strong branch expansion and a complete retail product suite.
v
YES’ credit appraisal is amongst the best with GNPLs less than 1% in a
challenging environment, despite clocking strong loan/PAT CAGR of 23/28%
over FY11-16.
v
Led by robust BV CAGR of 23% (highest in the system), superior RoEs of 20%+,
strong asset quality and increased balance sheet granularity, we believe YES
will bridge valuation gap v/s peers.
Research covered
Cos/Sector
Yes Bank
Info Edge India
Fuel or Engines
Key Highlights
Re-rating led by diversification and balance sheet granularity
Significant improvement in Zomato’s performance in FY17
Economy: Consumers v/s Businesses: Who will win?
Piping hot news
Biz confidence hits record high with cos upbeat on economy: CII
v
“A sharp uptick in business outlook, at the onset of 2017, underpins the hope
Quote of the day
You and I come by road or rail, but
economists travel on infrastructure
that the reform initiatives of the government would unravel a host of
investment opportunities for firms, going forward,” CII said on the surge in the
index.
Chart of the Day: YES BANK - Transformed business model in FY20 – Retail to account for ~45% of overall loan mix
FY11 - Significantly low retail loans, %
9MFY17 Retail banking gaining pace, %
Expect transformed business model by FY20, %
Research Team (Gautam.Duggad@MotilalOswal.com)
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.