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YES Bank shares consolidate post Q1; ICICI Securities upgrades to 'Hold'
By comparison, the BSE Sensex has added around 0.5 per cent during the period.
Domestic brokerage ICICI Securities has upgraded the stock to 'Hold' from 'Reduce' following its quarterly results, citing sustained improvement in its profitability, coupled with the possibility of Sumitomo Mitsui Banking Corporation (SMBC) further raising its stake in the bank.
"The possibility of further stake increase by SMBC over the near/medium term cannot be ruled out and, thus, the deal, if approved, seems to be having meaningful embedded option value. We increase our target price to ₹20 (vs ₹16) based on ~1.1x (earlier~0.9x) FY27 adjusted book value. We upgrade the stock to 'Hold' (vs 'Reduce')," it said in its recent report.
Why is ICICI Securities positive on YES Bank?
1) Sumitomo may increase shareholding
Japanese multinational Sumitomo Mitsui's decision to purchase a 20 per cent stake in YES Bank from State Bank of India (SBI) and other banks is a positive event for the bank and the stock, according to the brokerage.
"While SMBC is yet to receive regulatory approval, we believe its induction as the largest shareholder is positive. The possibility of further stake increase by SMBC over the near/medium term cannot be ruled out as well," ICICI Securities said.
2) Business growth soft but NIM stable
YES Bank's loan growth moderated further to 5 per cent year-on-year (Y-o-Y), and slipped 2 per cent Q-o-Q, to ₹ 2,41,000 crore. Deposits growth, too, slowed down to 4 per cent Y-o-Y, and down 3.1 per cent Q-o-Q, to ₹ 2,75,800 crore.
However, as RIDF declined 16 per cent Y-o-Y and 1 per cent Q-o-Q to ₹36,800 crore, net interest margin (NIM) stayed stable Q-o-Q at 2.5 per cent.
"We believe receding RIDF and lagged impact of deposits repricing may enable improving trajectory in NIM Q3FY26 onwards," the brokerage said.
On its part, YES Bank is targeting 12–15 per cent credit growth for the year. The guidance for exit FY26 return on asset (RoA) is unchanged at ~1 per cent. YES Bank aspires for RoA of ~1.5 per cent by FY30.
3) Sustained profitability
ICICI Securities lauded the bank's strong treasury income of ₹480 crore or 0.5 per cent of assets.
YES Bank reported PPoP (operating profit) growth of 53.4 per cent Y-o-Y/3.3 per cent Q-o-Q to ₹1,358 crore and net profit surge of 59.4 per cent Y-o-Y/8.5 per cent Q-o-Q to ₹801.1 crore, showing sustained improving trajectory.
4) Headline gross/net NPA stable
Gross slippages inched up to 2.4 per cent annualised vs 2.0 per cent Q-o-Q. However, YES Bank stated that unsecured personal loan and credit card slippages saw improvement over the March quarter of the previous financial year.
Gross / net non-performing asset (NPA) ratio was stable Q-o-Q at 1.6 per cent / 0.3 per cent, respectively.
"We are closely monitoring retail stress, though believe that nil SR and 0.3 per cent NNPA should keep incremental credit costs comfortable," ICICI Securities said.
YES Bank shares: tech outlook
YES Bank shares have been in a consolidation phase, with a negative bias, on the technical chart since June 2025. As per the momentum indicators – the Slow Stochastic, and MACD lines – the stock is witnessing a lacklustre trend on the daily charts and is expected to stay rangebound.
Further, while YES Bank stock is below the 'Overbought' threshold of '80' on the RSI-14 indicator, it is nearing its near-term resistance of ₹20.54, which is the 50-day moving average. It is also hovering around the 20-DMA of ₹20.12 per share. Add to it, the Supertrend line resistance of ₹20.67 per share on the daily chart is acting as the biggest hurdle for the stock. YES Bank has been trading below the level since June 12, 2025.
On the downside, if the stock fails to break above the 20-DMA, it may slide further to ₹19.74 per share and ₹19.39 per share, which are its lower end of the Bollinger Band and 200-DMA, respectively.
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