Yes Bank

Despite phenomenal growth since its inception, Yes Bank continues to remain one of the smallest banks in terms of total assets (~0.4 per cent market share) in the Indian banking space. Therefore, the opportunity for Yes Bank to grow faster than most other listed banks in India would continue to remain for a long time.

The bank has demonstrated its capability in gaining market share of CASA every year since its inception. While share of CASA in total deposits is very low (9.5 per cent), the growth in CASA has been remarkable (66 per cent CAGR from FY06 to FY09). With the bank having invested heavily in growing its branch network (123 branches Q1FY10), the bank is not far from an inflexion point in growing its CASA on a sustained basis at levels far higher than the industry enabling it to sustain its profitable balance sheet growth momentum. The ability of the bank to deliver superior RoAs with balance sheet growth rates significantly higher than the industry warrant premium valuations for the stock. The stock is valued at 3.6x FY10E adjusted book value. At Rs CMP, the stock trades at 17.4X FY10E and 14.7x FY11E EPS and 2.7x FY11E adjusted book value.