Yes Bank: Still Say Yes

We got interested in the stock during the volatility seen in the Yes Bank stock during its failed QIP in Sep-16 (Yes Bank: Say Yes). Time flies and we are reviewing our position in the Yes Bank stock with the price up by 30%+. We are looking at market volatility in the stock price to add to our positions in the stock.

So do we buy the stock?

Looking at the stock since its listing its difficult to find a reason not to buy the stock. It is a copybook example of a stock forming higher highs with higher lows. We had highlighted it in our previous note (Yes Bank: Say Yes) and we don’t see any change.

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We continue to like it for the fact that it has been able to consistent PAT growth.

PAT(RS Crore) PAT Growth(yoy)% PAT Growth CAGR( since FY06)
FY06 55.32
FY07 94.4 71% 71%
FY08 200 112% 90%
FY09 303.8 52% 76%
FY10 477.7 57% 71%
FY11 727.1 52% 67%
FY12 977 34% 61%
FY13 1,300.7 33% 57%
FY14 1,617.8 24% 52%
FY15 2,005.4 24% 49%
FY16 2,539.4 27% 47%
FY17 3,330.1 31% 41%

Where is the margin of safety?

The margin of safety is in the business momentum with which the PAT is growing. The business is available at a PE of 20-21. We continue to hold our positions in the stock. We would be looking at market volatility to add to our positions in the stock.

We are looking at the business performance and not the day to day stock price. If the business momentum sustains we would be glad to keep holding the stock.



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