Thursday, July 25, 2013

Yes Bank - Best run bank, great results but lot of naysayers!

Critical points:

  • One man show, ain't an organization
  • Well not anymore. 3 key men inducted onto the Board - Rajat (can easily take pants off the gazillion analysts, great banker); Pralay (lays retail question to rest)
  • Promoter is the most aggressive and has a super track record of execution - so much so that all the big wigs in the banking firmament stand up and clap


  • Don't understand retail banking
  • retail has gone from nothing to 39% of the book (including CASA)
  • clocking 1000 crores per quarter in SA; branch count is 500 and ATM count is 2 x that
  • Branches are understaffed - does it really matter?; as long as they can get new gen kids who can do online transactions or Babus, who don't visit branches

  • Asset quality will show lumpiness
  • NNPAs of 0.03% - it is gravity defying - so what if it goes up a bit?

My bet:
Valuations are at the bottom or some where there
Cycle - I don't have a clue whether RBI is increasing rates with short term focus or longer term focus - What ever, the case may be reducing currency volatility at the cost of interest rate volatility is futile as last two cycles demonstrated!

Two year call - lets revisit in 2015
- NIM stays above 3.0%
- CASA stays above 25%
- Fund raise successfully completed
- Overall - the bank will be in the top decile compared to other banks!


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