YESBANK & UNION BANK STOCK CASH PREDICTION

Maintained its  "sell" recommendation despite raising the target price for YES Bank. Due to the company's solid performance over the past few quarters, we increased our price target for Union Bank to Rs 100 per share. Union Bank highlighted the bank's various initiatives and progress toward improving underwriting standards, focusing on the prompt resolution of stressed assets, expanding credit and deposits, and improving key operational parameters with the goal of delivering superior performance over time.

The bank anticipates that the retail segment and improving trends in the corporate and SME segments will continue to drive loan growth. Margins are likely to remain above 3% in the third and fourth quarters due to the re-pricing, particularly on the MCLR book, and the high mix of floating book. A better outlook on asset quality is also provided by controlled restructuring and a low SMA book. In general, the bank intends to maintain its credit cost guidance of 1.7% for FY23 and a RoA of 1% by FY25. By FY24, we anticipate that loans will increase by 12% to 13% in the fiscal years 23-24, with ROA and ROE increasing by 0.8% and 13.9%, respectively. Based on 0.9 time Sep’24E adjusted book value, we maintain our BUY rating with a target price of Rs 100.
It reiterated its negative outlook and expressed surprise at the trading price of YES Bank. Not a new development, but rather the closing or near-closing of previously announced transactions—the sale of NPLs to the ARC and capital infusion—are the focus of the most recent news flow. Even though these are important milestones to reach, these premium multiples might be justified if we saw more than we currently do. It has maintained its Sell rating on YES Bank and increased the stock's fair value from Rs14 to Rs16. At the moment, Yes Bank trades at a discount of 15% to Axis Bank and a premium of 10% to IndusInd Bank. We believe that this cannot be sustained. It stated that the bank must further enhance its liability franchise due to the high cost of funds differential with frontline banks. This usually requires much more time and significant investments. It is focusing its loan book on markets where it has no real advantage. As a result, we should anticipate lower returns from YES Bank than from the front line banks.
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