YESBANK - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 18 Dec 25, 02:55 pm

Fundamental Rating: 2.7

📊 Core Financials: Yes Bank shows weak fundamentals with quarterly PAT at 654 Cr, down from 801 Cr (-18.3% variation). Profitability is modest, with ROCE at 6.34% and ROE at 5.38%, reflecting low capital efficiency. Debt-to-equity ratio of 7.28 highlights high leverage, raising financial risk. Cash flows remain under pressure due to weak margins and high debt obligations.

💹 Valuation Indicators: Current P/E of 24.1 is above industry average (14.6), suggesting overvaluation relative to peers. P/B ratio ~1.37 (21.6 ÷ 15.7) reflects fair pricing but limited margin of safety. PEG ratio of 0.78 indicates valuation is somewhat aligned with growth, but earnings volatility undermines confidence. Intrinsic value appears lower than current market price, signaling caution for fresh entry.

🏢 Business Model & Competitive Advantage: Yes Bank operates in retail and corporate banking. Competitive advantage lies in its established network and customer base. However, high leverage, modest profitability, and weak return ratios limit overall health compared to stronger peers in the sector.

🎯 Entry Zone Recommendation: Attractive entry zone lies near 18–20 ₹ (closer to DMA 200 and below current levels). Current price (21.6 ₹) is slightly above fair accumulation zone; accumulation is better on dips.

📈 Long-Term Holding Guidance: Not suitable for long-term compounding unless profitability improves and leverage reduces. Only speculative investors may consider small exposure near lows, but long-term holding is risky without structural turnaround.

Positive

• 📈 Large customer base and established banking network
• 💰 FII holdings increased (+20%), showing strong foreign investor interest
• 📊 PEG ratio (0.78) indicates valuation aligned with growth potential

Limitation

• ⚠️ High debt-to-equity (7.28) increases financial risk
• 📉 Quarterly PAT declined (801 Cr → 654 Cr)
• 📊 Low ROCE (6.34%) and ROE (5.38%) reflect weak efficiency
• 🔻 DII holdings decreased (-19.5%), showing reduced domestic confidence

Company Negative News

• 📉 Decline in quarterly profits
• ⚠️ High leverage and weak return metrics

Company Positive News

• 📈 Strong foreign investor confidence (+20% FII holding)
• 💹 Established presence in retail and corporate banking

Industry

• 🏭 Industry P/E at 14.6, lower than Yes Bank’s valuation
• 📊 Banking sector remains competitive, with stronger peers showing better profitability and efficiency

Conclusion

❌ Yes Bank is financially weak with high debt, modest profitability, and stretched valuations compared to industry averages. While foreign investor confidence is a positive, fundamentals remain fragile. Best strategy: avoid fresh entry at current levels; speculative accumulation only near 18–20 ₹ with strict risk management.

Would you like me to extend this into a peer benchmarking overlay comparing Yes Bank against stronger private banks like HDFC Bank, ICICI Bank, and Axis Bank, or a basket scan highlighting undervalued peers for safer compounding?