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Yes bank delivered healthy set of numbers for Q1FY2019, with PAT growth of 30.5% yoy. On the operating front, the bank reported 22.7% yoy growth in NII, however, the NIM sequentially softened by 10bps driven by higher funding cost and stable loan book yields. The bank managed to reduce its expenses and brought down the cost/income ratio from 42.1% in Q1FY2018 to 37.3% in
Q1FY2019.

Outlook & Valuation: We expect YES Bank to grow its advances at CAGR of 32% over FY2018-20E. Improvement in CASA, rating up-gradation and in-house priority sector lending would support NIM going forward. At CMP, YES trades at 2.4x FY20E P/ABV, which we believe is attractive considering growth prospects, hence, we recommend BUY with a target price of `435 over the next 12 months.

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