Yes Bank Shares Rise on Strong Q4, But Brokerages Flag Limited Upside

Shares of Yes Bank extended gains for the fourth consecutive session on Monday, after the private lender reported a strong performance for the March quarter and the full financial year FY26, marked by improvement across key operational metrics.

The Mumbai-based lender posted a 45% year-on-year rise in net profit for Q4FY26, while net interest income (NII) grew 16%, reflecting better core income traction. Net interest margins (NIM) improved to 2.7%, while operating profit rose 23%, indicating stronger efficiency despite a cost-to-income ratio of 66.7%.

Growth across the balance sheet remained steady. Advances rose 11% and deposits increased 12%, supported by strong traction in current account savings account (CASA) deposits, which crossed ₹1 lakh crore. Asset quality also showed improvement, with gross non-performing assets (GNPA) at 1.3% and net NPAs at 0.2%, signalling reduced stress.

Brokerages Divided Despite Strong Quarter

Brokerages, however, remained divided on the stock despite the strong quarterly performance.

ICICI Securities noted that the bank delivered a robust quarter with improvement in margins and growth momentum. It highlighted that return on assets (RoA) touched 1% in Q4FY26 and 0.8% for FY26, supported by a rise in NIM despite broader sectoral pressure.

The brokerage pointed to strong CASA growth and a declining RIDF drag as key positives, with the bank expecting further improvement in margins going ahead. It expects loan growth to remain broadly in line with system growth, estimating a 12% CAGR in advances over FY26–28.

However, it maintained a hold rating with a revised target price of ₹21, citing limited upside and the need for further improvement in core profitability and credit costs.

Anand Rathi, on the other hand, maintained a more cautious stance with a Sell rating and a target price of ₹19. While acknowledging improved operating performance and balance sheet growth, the brokerage flagged concerns over the bank’s structurally lower margins and elevated cost base.

Retail Stress, RoE Remain Key Monitorables

Anand Rathi noted that while asset quality improved due to recoveries, stress in the retail segment remains a key concern, with slippages still elevated at around 2.8%. It added that return on equity (RoE) is likely to remain in single digits over the medium term, limiting valuation upside.

The brokerage also highlighted that although NIM expanded due to a reduction in RIDF balances, margins are expected to remain below 3% in the medium term. Higher operating costs and relatively weaker fee income growth could continue to weigh on profitability.

Meanwhile, the bank has guided for credit growth in line with industry trends at 13–15% for FY27, driven by corporate and commercial segments, while expecting a gradual recovery in retail growth.