YES Bank shares fall over 4% after Q4 results. What should investors do?

Shares of private lender YES Bank fell 4.5% to Rs 15.48 in Monday's intraday trade on the BSE after the bank reported a 45% year-on-year drop in standalone net profit to Rs 202.43 crore for the quarter ended March 31 from Rs 367.46 crore in the corresponding quarter of FY22, as provisions for bad loans increased.

The profit after tax (PAT) was below the Street's estimates, which expected it in the range of Rs 232-405 crore.

The net profit for FY23 stood at Rs 717.40 versus Rs 1,066.21 crore reported by the lender in FY22. However, the net profit was up nearly 290% sequentially versus Rs 51.52 crore reported in Q3FY23.


The standalone interest earned during the period stood at Rs 6,216.24 crore, up over 25% YoY from Rs 4,947.53 crore in Q4FY22. For the year ended March 31, 2023, the interest income stood at Rs 22,697.43 crore as against Rs 19,023.51 reported during the previous financial year.

The total income for the reporting quarter stood at Rs 7,298.51 crore, up 25% YoY. The interest expended during the January-March 2023 quarter stood at Rs 4,110.92 crore, a rise of 31% YoY and 5.4% sequentially.

The Gross NPA was down to 2.17% in the March 2023 quarter versus 13.93% in the year-ago period. However, it was higher from Q3FY23 at 2.02%. However, net NPA at 0.83% was down sequentially (1.03%) and on the YoY basis (4.53%), the company said in its filing to the exchanges.
At 10.32 am, the stock was trading 3.3% lower at Rs 15.69 on the BSE. On a year-to-date basis, the stock has also declined 27%, however, it has risen 14% in the last one year.

After Q4 FY23 results, brokerage firm Kotak Institutional Equities maintained its ‘reduce’ rating on YES Bank with a target price of Rs 16.

"We don’t find the valuations compelling to change our view despite the bank having underperformed its peers in recent years. We would continue to evaluate the bank based on the choices it is likely to make to improve the return ratios," the brokerage said.

"There is going to be a possible tailwind coming from negligible or negative credit costs but it is extremely challenging to build a compelling higher-valuation argument primarily through this thought process," Kotak said.


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