YES Bank hits record high; Nomura revises target price

Thus far in 2016, the stock rallied 50% as compared to 2.5% gain the S&P BSE Sensex.

YES Bank has moved higher to its record high of Rs 1,092 on the BSE in an otherwise subdued market, after Nomura maintained a ‘buy’ rating on the stock with revised target price of Rs 1,300 from its earlier target of Rs 1,125.

YES Bank’s asset quality, according to the research firm, has held up better than most corporate banks.

According to Nomura, YES Bank’s credit costs at around 60 basis points (bps) in FY15/16 and almost no impact from the RBI’s asset quality review highlight its superior underwriting, driven by better collateral structuring.

"The bank believes that around 70% of its exposure to stressed groups is well collateralised and we will continue to see examples of those exits even in FY17. This provides comfort that credit costs for Yes Bank will stay within the guided range," Nomura said in a report.

“We will continue to see exits from stressed names by YES Bank, driven by self-liquidating collateral. Also the bank is delivering well on its retail liability franchise and we expect a similar scale up on the assets side as well. With low corporate asset quality risk and an improving retail franchise, Yes Bank’s valuations have more scope for re-rating, in our view,” the brokerage firm mentioned in a report dated June 23, 2016.

Thus far in 2016, the stock rallied 50% from Rs 726 on December 31, 2015 as compared to 2.5% gain the S&P BSE Sensex. Till 12:24 PM, a combined 987,872 shares changed hands on the counter on the BSE and NSE.