Higher provisioning

The Bank's net profits were largely due to higher provisioning, of Rs 2,100 crores towards a loan book that look stressed. Slippages too increased on account of the Jet Airways and IL&FS. There have been very conservative measures adopted, which should bear fruit in the coming days.

Going forward the bank would continue to focus on retail and also on working capital for corporates. This is likely to reduce stressed assets in the more longer term. An emphasis would also be laid on the SME sector.

Loan growth decent

The loan growth target, the bank has set for itself is around 24 to 26 per cent, while retail loans are expected to be around 30 per cent, which would be a thrust area for the bank. Building retail liabilities would be the key area of the bank.

In the next five years, the bank expects to have a 50 per cent contribution from the retail sector.

Valuations

The bank is likely to have pain over the next few quarters. It is likely to report an EPS of around Rs 13 by 2020-21. This means the stock is trading at around 12-13 times, two year forward earnings. This is not very expensive. Also, it is trading at around 1.4 times the price to book. This is relatively cheap for a good private sector bank.

Remember, the shares of Axis Bank and ICICI Bank had languished for a longish period of time, as they were busy cleaning the NPA mess. The same could hold true for Yes Bank. There could be a period of pain for another few quarters. If investors have the patience, this share could be a good bet at a price of around Rs 155.

Disclaimer

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