Yes Bank

703 views
668 views

Published on

0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
703
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
21
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

Yes Bank

  1. 1. India Equity Research | Banking and Financial Services Result Update YES BANK • Business growth rebounds; margins stableYES Bank reported NII of INR 3.48 bn (up 43% Y-o-Y, 8% Q-o-Q) in Q4FY11, ahead April 20, 2011of our estimate (INR 3.3 bn), aided by stable margins (2.8%) against expectation of10bps decline and strong earning asset growth (up ~15% Q-o-Q). Barring financial Reuters: YESB.BO Bloomberg: YES INmarkets, all segments of other income witnessed strong traction, supporting a 17%Y-o-Y and 16% Q-o-Q growth. Headline asset quality numbers continue to improve EDELWEISS 4D RATINGSwith gross NPA ratio at 0.23% and net NPA ratio of 0.03%; on account of higher NPL Absolute Rating BUYprovisioning, provision coverage improved sequentially by 12.5 percentage points to Performer Rating Relative to Sector88.64%. PAT came in at INR 2.03 bn (up 45.2% Y-o-Y, 6.4% Q-o-Q), in line with our Risk Rating Relative to Sector Mediumestimate. Sector Relative to Market Equalweight Note: Business growth rebounds Please refer last page of the report for rating explanation Business momentum picked up during the quarter with deposit growth (16.4% Q-o-Q, 71.4% Y-o-Y) outpacing advances growth (10.4% Q-o-Q, 54.8% Y-o-Y) MARKET DATA resulting in 4 percentage points contraction in CD ratio to 75%. Earning assets CMP : INR 331 grew ~15% Q-o-Q. CASA deposits tracked overall deposits growth, resulting in 52-week range (INR) : 388 / 234 stable CASA ratio (10.3%). Management expects momentum in CASA accretion Share in issue (mn) : 347.1 to continue. Broad-basing of credit to commercial banking and retail, which M cap (INR bn/USD mn) : 115 /2,593 began in Q2FY11, continued through H2FY11 in line with the bank’s VERSION 2 Avg. Daily Vol. BSE/NSE (‘000): 2,910.4 strategy, reducing the share of corporate book. YES Bank continued to reduce its SHARE HOLDING PATTERN (%) exposure to TMT (down 25% Q-o-Q). Management guided for 35% loan book Promoters* : 26.6 growth over FY12. MFs, FIs & Banks : 14.7 Margins stable: a key positive FIIs : 45.5 Against street expectation of margin compression given the wholesale funded Others : 13.2 liability of the business, the bank’s margins remained stable during the quarter * Promoters pledged shares : 1.0 (% of share in issue) (at 2.8%), drawing upon asset/liability re-pricing benefit. Both yield on advances and cost of funds jumped 70bps sequentially to 10.7% and 7.8%, respectively, PRICE PERFORMANCE (%) resulting in stable spreads. Management expects spreads to improve going Stock Nifty EW BFSI Index forward with steepening of the yield curve. From a high of 3.2%, NIMs have 1 month 17.2 6.6 8.2 come off to 2.8%, bottoming ahead of peers. 3 months 24.4 0.1 6.4 Outlook and valuations: Balanced growth; maintain ‘BUY’ 12 months 29.5 8.9 24.0 We expect YES Bank to grow well above the system, albeit at a slower pace, delivering superior earnings (at ~33% CAGR over FY11-13E) and attractive RoEs of 23% by FY12E. A well entrenched fee income platform coupled with lower credit cost will deliver high RoAs of 1.5%. Also, management has demonstrated its strong execution capability by successfully managing the bank during the cyclical downturn. The stock is currently trading at 2.5x FY12E adjusted book and 11.7x FY12E earnings. We maintain ‘BUY/Sector Performer’ recommendation/rating on the stock. Nilesh Parikh +91 22 4063 5470 nilesh.parikh@edelcap.comFinancialsYear to March Q4FY11 Q4FY10 Growth % Q3FY11 Growth % FY11 FY12E Kunal ShahNet int. inc. (INR mn) 3,485 2,442 42.7 3,232 7.8 12,469 16,301 +91 22 4040 7579Net profit (INR mn) 2,034 1,400 45.2 1,911 6.4 7,272 9,823 kunal.shah@edelcap.comAdj.B/V per share (INR) 109 134Diluted EPS (INR) 5.7 4.1 39.6 7.8 (27.2) 20.9 28.3 Vivek VermaPrice / Adj. book (x) 3.0 2.5 +91 22 4040 7576Price/ PPOP (x) 9.7 7.3 vivek.verma@edelcap.comDiluted P/E (x) 15.8 11.7Edelweiss Research is also available on www.e del resear ch. com, Bloomberg EDEL <GO>, Thomson First Call, Reuters and Factset. Edelweiss Securities Limited
  2. 2. Banking and Financial Services Strong fees income growth Fees income grew 16.6% Y-o-Y and 15.5% Q-o-Q, led by strong traction in transaction banking (up 31% Q-o-Q) and financial advisory (up 44% Q-o-Q). However, fees income from financial markets contracted 41% Q-o-Q, reflecting lumpiness of the business and the impact of hit on account of equity exposure (~INR 50 mn). Going forward, management expects traction to continue, as it leverages new business relationships. Asset quality continues to be benign The bank’s headline asset quality indicators continued to be healthy due to controlled slippages and higher recoveries. With weak assets of INR 1.63 bn (reported gross non- performing assets (NPAs) + standard asset restructuring) below ~1%, we believe YES Bank is in a better position to navigate asset quality pressures. MFI exposure declined sequentially by INR 400 mn to INR 2.5 bn (0.74% of advances). Higher core income aiding cost-to-income improvement YES Bank’s cost-to-income ratio for Q4FY11 declined 96bps Q-o-Q to 34.8%, an impressive statistic, due to strong growth in core income. During the quarter, it added 144 employees and 29 branches. With the stated objective of expanding branch network by 70 and adding 100 employees per month, cost-to-income ratio has an upward bias. We have built in cost-to-income ratio of 35% for over FY11-13. Branch expansion strategy: Key growth driver Over the next few quarters, as balance sheet continues to grow (above industry), building a deposit franchise will be critical. The subdued interest rate environment has enabled YES Bank to maintain higher margins. Margins could, however, be hit, if branch expansion/improving productivity from new branch strategy does not lead to lower yet stable retail deposit franchise or improve the current account balances from existing relationships. The bank is currently operating 214 branches and intends to reach 325 branches by FY12. Delay in expanding the branch network/presence could be a key risk to the bank’s ambition of increasing its CASA ratio ~2-3 percentage points Y-o-Y. Other highlights: Tier I ratio stood at 9.7% at Q4FY11 end. The bank has obtained board’s approval to raise USD 500 mn capital. At the expected growth rate, it will need capital between 12- 15 months from now.Chart 1: Deposit growth outpaced advances growth; CD ratio declined by 4% pts to 74.8%(%) Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411Advances (INR mn) 126,710 162,943 187,104 221,931 262,568 303,481 311,220 343,636Advances growth Q-o-Q (%) 2.2 28.6 14.8 18.6 18.3 15.6 2.6 10.4Advances growth Y-o-Y (%) 26.1 41.5 71.1 78.9 107.2 86.2 66.3 54.8Deposits (INR mn) 153,420 193,651 220,386 267,986 302,387 400,137 394,528 459,389Deposit growth Q-o-Q (%) (5.1) 26.2 13.8 21.6 12.8 32.3 (1.4) 16.4Deposit growth Y-o-Y (%) 22.2 35.1 62.8 65.7 97.1 106.6 79.0 71.4CD ratio (%) 82.6 84.1 84.9 82.8 86.8 75.8 78.9 74.8CASA (%) 9.5 9.6 10.1 10.5 10.5 10.1 10.2 10.3Chart 2: Contribution of corporate and institutional banking continued to decline Q1FY10 Q2FY10 Q3FY10 Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11Corporate and institutional 65 72 73 69 73 70 68 65Commercial 30 23 23 26 22 20 22 23Retail (Branch banking) 6 5 4 5 5 11 10 12 Source: xxx 2 Edelweiss Securities Limited
  3. 3. Yes BankChart 3: TMT exposure declined to <10% of advances(%) Q1FY10 Q2FY10 Q3FY10 Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11Food and agriculture 18.0 18.0 19.1 16.9 13.0 15.7 18.1 19.8Infrastucture and logistics 17.0 16.0 16.2 20.5 18.2 21.9 22.7 18.7Engineering 19.0 18.0 20.3 19.1 20.4 19.7 21.7 18.8Lifesciences and chemicals 8.0 9.0 10.0 8.0 6.9 4.5 4.8 5.3TMT 15.0 18.0 13.6 13.3 23.1 18.5 14.4 9.7Others 23.0 21.0 20.8 22.1 18.3 19.7 18.4 27.7Chart 4: Fee income break up (INR mn)(%) Q1FY10 Q2FY10 Q3FY10 Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11Financial markets 32.8 36.6 21.9 29.6 15.7 10.8 25.4 12.9Financial advisory 16.6 41.5 44.6 36.1 52.9 48.7 33.1 41.3Third party distribution 6.5 7.7 4.5 7.3 7.6 11.3 10.8 10.8Treasury trading income 27.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0Transaction banking 16.4 26.1 29.0 27.0 23.8 29.3 30.8 35.0Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0Chart 5: Contribution of non fund income to total revenue improved Q-o-Q(%) Q1FY10 Q2FY10 Q3FY10 Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11Fees income growth 22.6 23.1 (5.7) 25.3 (10.2) (8.9) 23.4 15.5Non fund income/Net revenue 41.2 43.5 37.7 39.6 35.4 29.5 33.3 34.9Chart 6: Lending spreads contracted(%) Q1FY10 Q2FY10 Q3FY10 Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q3FY12Spreads 4.4 3.9 3.7 3.4 3.3 2.8 2.9 2.8NIM 3.1 3.1 3.1 3.2 3.1 3.0 2.8 2.8COF 8.1 7.2 6.6 6.3 6.3 6.7 7.1 7.8YoA 12.5 11.1 10.3 9.7 9.6 9.5 10.0 10.7Chart 7: Tier I at 9.7%(%) Q1FY10 Q2FY10 Q3FY10 Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q3FY12Tier-I 10.3 9.4 9.0 12.9 10.3 11.0 10.4 9.7Tier-II 7.4 7.9 7.2 7.8 6.3 8.4 7.8 6.8 Source: Company, Edelweiss research Edelweiss Securities Limited 3
  4. 4. Banking and Financial ServicesFinancials snapshot (INR mn)Year to March Q4FY11 Q4FY10 Growth (%) Q3FY11 Growth (%) FY11 FY12E FY13EInterest on advances 8,883 4,900 81.3 8,178 8.6 29,891 44,594 63,090Interest on investments 3,269 1,718 90.3 2,993 9.2 10,273 14,638 17,944Interest on other resources 60 19 222.0 70 (14.7) 253 236 305Other interest income 13 9 50.6 21 (34.6) 6,233 8,320 10,729Interest income 12,226 6,646 84.0 11,262 8.6 40,418 59,467 81,339Interest expenses 8,741 4,204 107.9 8,030 8.9 27,948 43,167 59,940Net interest income 3,485 2,442 42.7 3,232 7.8 12,469 16,301 21,400Other income 1,868 1,601 16.6 1,617 15.5 6,233 8,320 10,729Fee income 1,868 1,601 16.6 1,617 15.5 6,233 8,120 10,529Operating expenses 1,865 1,467 27.1 1,736 7.4 6,798 8,686 11,086Staff expense 1,030 708 45.4 903 14.0 3,623 4,744 6,166Other opex 835 759 10.0 833 0.3 3,175 3,941 4,921Pre prov profit (PPP) 3,488 2,576 35.4 3,113 12.1 11,904 15,735 20,843Provisions 433 426 1.6 250 73.4 982 1,051 1,320Profit before tax 3,055 2,150 42.1 2,863 6.7 10,922 14,884 19,722Provision for tax 1,021 750 36.2 952 7.3 3,650 5,061 6,706Profit after tax 2,034 1,400 45.2 1,911 6.4 7,272 9,823 13,017EPS (INR) 5.7 4.1 39.6 7.8 (27.2) 20.9 28.3 37.5Ratios 0.0 0.0 0.0 0.0 0.0 0.0NII / GII 28.5 36.7 28.7 30.9 27.4 26.3Cost - income 34.8 36.3 35.8 36.3 35.3 34.5Provisions / PPOP 12.4 16.5 8.0 8.3 6.7 6.3Tax rate 33.4 34.9 33.2 33.4 34.0 34.0CD ratio 74.8 82.8 78.9 76.8 80.3 79.6CASA 10.3 10.5 10.2 10.3 13.5 15.0Capital adequacy (%) 16.5 20.6 18.2 20.6 15.9 16.0NIM (%) 2.8 3.2 2.8 2.7 2.5 2.5Balance sheet data (INR bn) 0.0 0.0 0.0 0.0 0.0 0.0Advances 344 222 54.8 311 10.4 344 464 603Deposits 459 268 71.4 395 16.4 459 594 775CD ratio 75 83 79 75 78 78Asset quality (INR mn) 0.0 0.0 0.0 0.0 0.0 0.0Gross NPA 805 602 33.8 728 10.6 805 1,149 1,846Gross NPA (%) 0.2 0.3 0.2 0.2 0.2 0.3Net NPA 92 130 (29.6) 174 (47.4) 92 253 425Net NPA (%) 0.03 0.06 0.06 0.03 0.05 0.07Provision coverage (%) 88.6 78.4 76.1 88.6 78.0 77.0 4 Edelweiss Securities Limited
  5. 5. Yes BankCompany DescriptionYES BANK is a private Indian bank promoted by Rana Kapoor and Ashok Kapur withfinancial support from Rabobank Nederland, and global institutional private equityinvestors –AIF Capital, and ChrysCapital. It is operational since November 2004 and isthe only greenfield bank approved by RBI in last decade. It has market cap of INR 115bn and balance sheet of ~INR 590 bn. It has branch network of 214 at the end of FY11and a CASA ratio of 10.3%. Corporate lending forms 65% of its book, commercial 23%and retail 12%.Investment ThemeYES BANK is one of the few private sector banks with product depth, sustainablecompetitive edge, and strong growth. Given the underlying credit demand and smallasset book, the loan book is expected to grow at more than 35% for the next two years.The bank’s high proportion of fee income enables high return on assets (of 1.6%+) andindicates its potential of generating higher than presently reported RoE (20%+), oncethe capital ratios normalise. Considering the bank’s strong fundamentals reflected in itsproduct width, adept management, and technological prowess, we find it to be theperfect acquisition candidate for a foreign player, once the regulations ease.Key RisksLower CASA can be a negative for the bank at this point of time when most banks arebanking on their franchise network.In the event of demand for credit dying down as in the current scenario, lack of pricingpower can impact its margins adversely (due to nascent deposit franchise). Edelweiss Securities Limited 5
  6. 6. Banking and Financial ServicesFinancial StatementsIncome statement (INR mn)Year to March FY09 FY10 FY11E FY12E FY13EInterest income 20,033 23,697 40,418 59,467 81,339Interest expended 14,921 15,818 27,948 43,167 59,940Net interest income 5,112 7,880 12,469 16,301 21,400Non interest income 4,571 5,812 6,233 8,320 10,729- Fee & forex income 2,739 4,283 5,532 7,207 9,345- Misc. income 345 543 701 913 1,184- Investment profits 1,486 986 - 200 200Net revenue 9,682 13,691 18,702 24,621 32,129Operating expense 4,187 5,007 6,798 8,686 11,086- Employee exp 2,180 2,569 3,623 4,744 6,166- Other opex 2,007 2,438 3,175 3,941 4,921Preprovision profit 5,495 8,684 11,904 15,935 21,043Provisions 836 1,419 982 1,051 1,320Loan loss provisions 836 1,265 982 1,051 1,320Investment depreciation - 154 - - -Profit before tax 4,659 7,265 10,922 14,884 19,722Provision for tax 1,621 2,489 3,650 5,061 6,706Profit after tax 3,038 4,776 7,272 9,823 13,017Reported PAT 3,038 4,776 7,272 9,823 13,017Diluted EPS (INR) 10.2 14.1 20.9 28.3 37.5Dividend per share (INR) - 1.5 2.5 2.5 2.5Dividend payout (%) - 12.5 13.8 10.2 7.7Growth ratios (%)Year to March FY09 FY10 FY11E FY12E FY13ENII growth 51.8 54.1 58.3 30.7 31.3Fees growth 20.5 56.4 29.2 30.3 29.7Opex growth 20.6 19.6 35.8 27.8 27.6PPOP growth 37.7 92.0 54.6 32.2 32.5PPP growth 56.9 58.0 37.1 33.9 32.1Provisions growth 90.8 51.3 (22.3) 7.0 25.6Net profit 51.7 57.2 52.2 35.1 32.5Operating ratiosYear to March FY09 FY10 FY11E FY12E FY13EYield on advances 13.6 10.2 10.6 11.0 11.8Yield on investments 8.2 6.8 7.1 7.1 7.0Yield on assets 10.7 8.4 8.8 9.1 9.7Net interest margins 2.7 2.8 2.7 2.5 2.5Cost of funds 8.1 5.8 6.3 6.9 7.4Cost of deposits 8.3 5.8 6.4 6.9 7.4Cost of borrowings 9.8 7.8 8.1 8.4 8.6Spread 2.6 2.6 2.5 2.3 2.3Cost-income 43.2 36.6 36.3 35.3 34.5Tax rate 34.8 34.3 33.4 34.0 34.06 Edelweiss Securities Limited
  7. 7. Yes BankBalance sheet (INR mn)As on 31st March FY09 FY10 FY11E FY12E FY13EEquity capital 2,970 3,397 3,472 3,472 3,472Reserves & surplus 13,272 27,499 34,469 43,291 55,305Net worth 16,242 30,896 37,941 46,762 58,777Sub bonds/pref cap 15,126 - - 6,000 12,000Deposits 161,694 267,986 459,389 594,123 775,163Borrowings 21,891 47,491 66,909 81,909 96,909Other liabilities 14,055 17,453 25,831 26,084 28,359Total liabilities 229,008 363,825 590,071 754,878 971,208Loans 124,031 221,931 343,636 463,909 603,082Gilts 46,801 67,865 152,383 179,507 235,460Others 24,369 34,235 35,905 47,364 49,691Cash and equivalents 19,227 26,733 34,960 44,969 58,622Fixed assets 1,311 1,155 1,324 1,534 1,656Other Assets 13,269 11,907 21,861 17,595 22,698Total assets 229,008 363,825 590,071 754,878 971,208Credit growth 32.8 71.9 52.9 35.1 29.3Deposit growth 21.8 65.7 71.4 29.3 30.5EA growth 32.8 63.6 61.6 29.8 28.7SLR ratio 25.5 21.5 25.0 26.6 27.0C-D ratio 83.0 86.1 76.8 80.3 79.6Low-cost deposits 8.7 10.5 10.3 13.5 15.0Gross NPA ratio 0.7 0.3 0.2 0.2 0.3Net NPA ratio 0.3 0.1 - 0.1 0.1Provision coverage 51.5 78.4 88.6 78.0 77.0Incremental slippage 0.9 0.9 0.3 0.5 0.6Net NPA / Equity 2.5 0.4 0.2 0.5 0.7Capital adequacy 16.6 20.6 15.9 16.0 16.4- Tier 1 9.5 12.9 14.6 13.5 13.2Book value per share (INR) 54.7 91.0 109.3 134.7 169.3RoE decomposition (%)Year to March FY09 FY10 FY11E FY12E FY13ENet interest income/assets 2.7 2.8 2.7 2.5 2.5Fees/Assets 1.6 1.7 1.4 1.2 1.3Investment profits/Assets 0.8 0.3 - - -Net revenues/assets 5.2 4.8 4.1 3.8 3.8Operating expense/assets (2.2) (1.8) (1.5) (1.3) (1.3)Provisions/assets (0.4) (0.5) (0.2) (0.2) (0.2)Taxes/assets (0.9) (0.9) (0.8) (0.8) (0.8)Total costs/assets (3.5) (3.2) (2.5) (2.3) (2.3)ROA 1.6 1.7 1.6 1.5 1.5Equity/assets 7.8 8.3 7.5 6.5 6.3ROAE (%) 20.6 20.3 21.1 23.2 24.7 Edelweiss Securities Limited 7
  8. 8. Banking and Financial ServicesValuation parametersYear to March FY09 FY10 FY11E FY12E FY13EDiluted EPS (INR) 10.2 14.1 20.9 28.3 37.5Y-o-Y growth (%) 51.1 37.5 49.0 35.1 32.5Book value per share (INR) 54.7 91.0 109.3 134.7 169.3Adjusted book value per share (INR) 53.7 90.7 109.1 134.2 168.5Diluted PE (x) 32.4 23.5 15.8 11.7 8.8Price/BV (x) 6.1 3.6 3.0 2.5 2.0Price/ Adj. BV (x) 6.2 3.7 3.0 2.5 2.0Dividend yield (%) - 0.5 0.8 0.8 0.8Price to income (x) 19.3 15.5 12.2 9.5 7.4Price to PPOP (x) 24.5 14.6 9.7 7.3 5.5PPOP 13 23 34 45 608 Edelweiss Securities Limited
  9. 9. RATING & INTERPRETATION Yes BankCompany Absolute Relative Relative Company Absolute Relative Relative reco reco risk reco reco RiskAllahabad Bank BUY SO H Axis Bank BUY SO MBank of Baroda BUY SO L Federal Bank BUY SO MHDFC HOLD SU L HDFC Bank HOLD SP LICICI Bank BUY SO L Indian Overseas Bank HOLD SU HInfrastructure Development HOLD SU M ING Vysya HOLD SP HFinance Co LtdKarnataka Bank BUY SO L Kotak Mahindra Bank BUY SP LLIC Housing Finance REDUCE SP M Manappuram General HOLD SU M FinanceOriental Bank Of Commerce BUY SU H Power Finance Corp BUY SO LPunjab National Bank BUY SO L Reliance Capital HOLD SP MRural Electrification Corporation BUY SO L Shriram City Union Finance BUY SO HSouth Indian Bank BUY SO H SREI Infrastructure Finance UNDER SO L REVIEWState Bank of India HOLD SP L Syndicate Bank BUY SP HUnion Bank Of India BUY SO L Yes Bank BUY SO M ABSOLUTE RATING Ratings Expected absolute returns over 12 months Buy More than 15% Hold Between 15% and - 5% Reduce Less than -5% RELATIVE RETURNS RATING Ratings Criteria Sector Outperformer (SO) Stock return > 1.25 x Sector return Sector Performer (SP) Stock return > 0.75 x Sector return Stock return < 1.25 x Sector return Sector Underperformer (SU) Stock return < 0.75 x Sector return Sector return is market cap weighted average return for the coverage universe within the sector RELATIVE RISK RATING Ratings Criteria Low (L) Bottom 1/3rd percentile in the sector Medium (M) Middle 1/3rd percentile in the sector High (H) Top 1/3rd percentile in the sector Risk ratings are based on Edelweiss risk model SECTOR RATING Ratings Criteria Overweight (OW) Sector return > 1.25 x Nifty return Equalweight (EW) Sector return > 0.75 x Nifty return Sector return < 1.25 x Nifty return Underweight (UW) Sector return < 0.75 x Nifty return Edelweiss Securities Limited 9
  10. 10. Banking and Financial Services Edelweiss Securities Limited, 14th Floor, Express Towers, Nariman Point, Mumbai – 400 021. Board: (91-22) 2286 4400, Email: research@edelcap.comVikas Khemani Head Institutional Equities vikas.khemani@edelcap.com +91 22 2286 4206Nischal Maheshwari Head Research nischal.maheshwari@edelcap.com +91 22 6623 3411Coverage group(s) of stocks by primary analyst(s): Banking and Financial ServicesAllahabad Bank, Axis Bank, Bank of Baroda, Federal Bank, HDFC, HDFC Bank, ICICI Bank, Infrastructure Development Finance Co Ltd,Indian Overseas Bank, Karnataka Bank, Kotak Mahindra Bank, LIC Housing Finance, Manappuram General Finance, Oriental Bank OfCommerce, Punjab National Bank, Power Finance Corp, Reliance Capital, Rural Electrification Corporation, State Bank of India, Shriram CityUnion Finance, South Indian Bank, Syndicate Bank, SREI Infrastructure Finance, Union Bank Of India, ING Vysya, Yes BankYes Bank EW Indices 1,600 400 Buy Buy 1,300 300 (INR) Buy 1,000 200 Buy 100 700 0 400 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 16-Apr-10 16-Oct-10 16-Apr-11 Yes Bank Ltd. EW Banks and Financial Services Index NiftyDistribution of Ratings / Market Cap Recent ResearchEdelweiss Research Coverage Universe Date Company Title Price (INR) Recos Buy Hold Reduce Total 19-Apr-11 State Bank Leader finally catching up- 2,733 Buy of India Hikes lending rates byRating Distribution* 118 51 17 189 25bps; EdelFlash* 3 stocks under review 18-Apr-11 HDFC Bank Earnings momentum intact; 2312 Hold > 50bn Between 10bn and 50 bn < 10bn Result UpdateMarket Cap (INR) 111 61 17 18-Apr-11 Muthoot Superior, sustainable RoEs Subscri Finance command premium be valuation; IPO Note Access the entire repository of Edelweiss Research on www.edelresearch.com This document has been prepared by Edelweiss Securities Limited (Edelweiss). Edelweiss, its holding company and associate companies are a full service, integrated investment banking, portfolio management and brokerage group. Our research analysts and sales persons provide important input into our investment banking activities. This document does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. The information contained herein is from publicly available data or other sources believed to be reliable, but we do not represent that it is accurate or complete and it should not be relied on as such. Edelweiss or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. The user assumes the entire risk of any use made of this information. Each recipient of this document should make such investigation as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult his own advisors to determine the merits and risks of such investment. The investment discussed or views expressed may not be suitable for all investors. We and our affiliates, group companies, officers, directors, and employees may: (a) from time to time, have long or short positions in, and buy or sell the securities thereof, of company (ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as advisor or lender/borrower to such company (ies) or have other potential conflict of interest with respect to any recommendation and related information and opinions. This information is strictly confidential and is being furnished to you solely for your information. This information should not be reproduced or redistributed or passed on directly or indirectly in any form to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject Edelweiss and affiliates/ group companies to any registration or licensing requirements within such jurisdiction. The distribution of this document in certain jurisdictions may be restricted by law, and persons in whose possession this document comes, should inform themselves about and observe, any such restrictions. The information given in this document is as of the date of this report and there can be no assurance that future results or events will be consistent with this information. This information is subject to change without any prior notice. Edelweiss reserves the right to make modifications and alterations to this statement as may be required from time to time. However, Edelweiss is under no obligation to update or keep the information current. Nevertheless, Edelweiss is committed to providing independent and transparent recommendation to its client and would be happy to provide any information in response to specific client queries. Neither Edelweiss nor any of its affiliates, group companies, directors, employees, agents or representatives shall be liable for any damages whether direct, indirect, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. Past performance is not necessarily a guide to future performance. The disclosures of interest statements incorporated in this document are provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. Edelweiss Securities Limited generally prohibits its analysts, persons reporting to analysts and their family members from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. The analyst for this report certifies that all of the views expressed in this report accurately reflect his or her personal views about the subject company or companies and its or their securities, and no part of his or her compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this report. Analyst holding in the stock: no. Copyright 2009 Edelweiss Research (Edelweiss Securities Ltd). All rights reservedEdelweiss ResearchSecurities Limited ww.e del resear ch. com, Bloomberg EDEL <GO>, Thomson First Call, Reuters and Factset.10 Edelweiss is also available on w Edelweiss Securities Limited

×