Author: root

Should you buy or sell the shares of Yes Bank?

Emkay Global has a sell rating on the stock of Yes Bank. In fact, the firm sees a solid 25% downside risk on the stock of Yes Bank. It believes the stock could slide to levels of as low as Rs 10, from the current levels of Rs 13, which means a fall of 24.8%, which can be huge. In any case, the markets are at near peak levels and given that the shares of Yes Bank are highly volatile, only brave investors could be buying.

According to Emkay Global, after a heavy loss in Q4FY21, Yes Bank returned to profitability in Q1FY22 with a profit of Rs 2.1 billion, mainly led by higher other income and lower provisions. The brokerage firm is of the opinion that the bank should prefer upfront stress recognition and a higher provision cover instead of token profits. This is a good key concern that Emkay Global has pointed out as far as the bank is concerned.

Credit growth remains weak, margins sub-par

According to the brokerage the credit growth was weak at Rs 1.7 trillion (down 0.5% yoy/2% qoq) mainly due to corporate drag. Retail growth was high at 31% yoy due to a low base.

“Yes Bank expects 20% growth in retail in FY22; however, asset quality remains a concern in this portfolio. Deposit growth was high at 39% yoy (Rs1.6 trilllion) due to a low base after last year’s scare. Current and Savings Account stood at 27%, but it was still far from its peak (38%). In our view, the road ahead will be challenging since even larger private banks are facing challenges on the CA front. The bank has also cut SA rates recently, which may impact SA mobilisation. Net Interest Margins improved by 50 bps qoq to 2.1% due to lower interest reversal on NPAs/interest waiver, but remained sub-par vs. past trends. The bank has guided for 15% credit growth and expects margins at 2.8%, which looks optimistic,” the brokerage has said.

Elevated asset quality risk remains for Yes Bank

According to Emkay Global, fresh slippages remained high at Rs 22 billion (5.4% of loans), mainly from corporate (Rs 12.5 billion) and retail (Rs7.6 billion).

Emkay Global expects the bank’s RoA trajectory to remain sub-par at 0.5-0.8% over FY23-24E vs. management expectation of 1-1.5%. “We retain Sell with a target price of Rs 10 (0.9x Sep’23E ABV) amid persistent concerns over its asset quality, sub-par return ratios, and unfavorable risk-reward ratio with higher valuations. Although the current management with regulatory/investor support has been able to avert bank failure, we believe that reorienting Yes Bank to a sustainable retail bank will require differentiated private banking management,” the brokerage has said,

Disclaimer:

The stock recommendation of Yes Bank, is picked from the brokerage report of Emkay Global Financials. However, neither the author, nor the brokerage, nor Greynium Information Technologies should be held responsible for decisions taken and losses incurred based on the above article. Investors should understand that there are inherent risks involved when investing in the markets. They should hence exercise due caution.

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Gold rates in the major Indian cities of Mumbai, Delhi, Chennai, Kolkata, Bangalore and Hyderabad fell marginally today. Below is the rates quoted by jewellers in the key Indian cities on July 27, 2021.

22 karats rate in the key Indian cities

Gold to take cues from the US Fed statement

Gold prices in India would now take cues from global prices, which in turn would largely depend on how the US Fed sees inflation and interest rates in the near future. The US Fed will release its policy statement and if it sounds hawkish, we might see fresh selling pressure in the precious metal. On the MCX, gold prices dropped a tad bit with gold Futures for August delivery trading at Rs 47,394, down about Rs 67 over the previous day’s closing.

According to Sandeep Matta, Founder, TRADEIT Investment Advisor, the global markets, gold prices, which were holding firm above the $1800 an ounce mark, fell and were last see trading at $1793 an ounce.

According to him, the US Federal Reserve’s meeting holds significance in the coming days on the direction, in which gold would move. Gold prices on MCX are also trading weaker and closed below the Rs 47500 on Monday and exactly matching the global price action, he said.

“From past few days we are regularly advising to avoid long trade due to waning bullish momentum and further anticipate that precious metal is going to break 47000 very soon,” Matta says. According to him the key level for GOLD AUG Contract – would be as follows.

Sell Zone Below – 47560 for the target of 47326-47175

Buy Zone Above – 47575 for the target of 47690-47850

Slight dip in international prices

In the global markets, spot gold futures fell below the $1800 an ounce mark to $ 1798 an ounce. Earlier, in the day the precious metal fell to as low as $1793 an ounce, before clawing back a tad bit.

The outcome of Wednesday’s US Fed meet would be crucial for gold in the coming days.

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