Future of Yes Bank: Recovery, Risks, and Stock Analysis – Should You Invest?

Introduction: Rising from the Ashes?

Yes Bank Ltd (NSE: YESBANK), once a symbol of India’s banking sector turbulence, has staged a gradual recovery since its 2020 collapse. With a current share price of ₹20.0 (as of 09 May 2024) and a market cap of ₹62,775 Cr, the bank is now India’s 6th-largest private sector lender by assets. But is it a safe investment or still a high-risk bet? This data-driven analysis decodes Yes Bank’s financial health, growth potential, and risks.

---

Yes Bank’s Current Performance

Metric	Value
Share Price	₹20.0 (52-week range: ₹16–₹27.4)
Market Cap	₹62,775 Cr
P/E Ratio	25.7 (Higher than peers)
ROE	5.44% (Low vs. industry median)
Gross NPA	1.6% (Mar 2025, down from 13.93% in 2022)
Net Profit (Q4 2024)	₹745 Cr (+90% YoY growth)

---

Financial Health: Signs of Stabilization

1. Reduced NPAs – A Key Positive

Yes Bank’s gross NPAs plummeted from 13.93% in 2022 to 1.6% in 2024, signaling improved asset quality. Net NPAs also fell to 0.3%, reflecting aggressive recovery efforts.

2. Profitability on the Rise

 

• • Net Profit: Surged from ₹372 Cr (Mar 2022) to ₹745 Cr (Mar 2025).

• • Revenue Growth: Revenue rose from ₹4,947 Cr (Mar 2022) to ₹7,623 Cr (Mar 2025), driven by retail loans and digital banking.

3. Balance Sheet Strengthens

 

• • Deposits: Grew 35% from ₹197,063 Cr (2022) to ₹284,420 Cr (2025).

• • Capital Adequacy Ratio (CAR): Healthy at 16.3%, above RBI’s 11.5% mandate.

---

Growth Drivers Fueling Yes Bank’s Revival

1. Retail & SME Banking Push

 

• • Retail Loans: Up 15% YoY, focusing on affordable housing and personal loans.

• • MSME Lending: Disbursed ₹15,000 Cr to small businesses in FY24.

2. Digital Transformation

 

• • YES ROBOT 2.0: AI chatbot handling 80% of customer queries.

• • UPI Transactions: Processed ₹1.2 trillion in Q1 2024 via partnerships with PhonePe and Google Pay.

3. Rural Expansion

 

• • YES Kisan: Agri-loans grew 25% YoY, targeting ₹5,000 Cr by 2025.

---

Red Flags & Challenges

Risk Factor	Impact
High P/E Ratio (25.7)	Overvalued compared to peers (ICICI: 19.4, HDFC: 20.4).
Contingent Liabilities	₹8.11 lakh Cr – potential future financial strain.
Low ROE (5.44%)	Underperforms industry median (7.11%).
No Dividends	Retaining profits for growth, disappointing income investors.

---

Peer Comparison: How Does Yes Bank Stack Up?

Bank	CMP (₹)	P/E	Market Cap (₹Cr)	ROE (%)	Gross NPA (%)
HDFC Bank	1,889.70	20.4	14,46,677	7.51	1.3
ICICI Bank	1,388.90	19.4	9,90,158	7.88	2.0
Axis Bank	1,151.10	12.7	3,56,604	7.11	1.6
Yes Bank	20.02	25.7	62,775	5.44	1.6

Key Takeaway: Yes Bank trades at a premium P/E despite lower profitability and scale.

---

Yes Bank Stock Forecast: 2024–2026

Bull Case (₹30–₹40)

 

• • Triggers: Sustained NPA recovery, UPI market share gains, and rural loan growth.

• • Catalysts: Strategic fintech partnerships or government support.

Bear Case (₹12–₹18)

 

• • Risks: Economic slowdown, resurgence of bad loans, or regulatory penalties.

---

Investment Verdict: High Risk, Moderate Reward

Buy If:

 

• • You’re a risk-tolerant investor betting on a full turnaround.

• • Digital banking gains accelerate beyond expectations.

Avoid If:

 

• • You seek stable dividends or low volatility.

• • Contingent liabilities worry you.

Risks, Opportunities and Outlook for Investors

Looking ahead, Yes Bank offers both upside potential and key risks. Opportunities include India’s robust banking demand and ongoing reforms: the banking sector in India (GDP ~6–6.5%) is expected to support double-digit credit growth, and Yes Bank’s push into underpenetrated retail/SME segments and digital payments could yield outsized returns if managed well. A strategic partner like SMBC might bring fresh capital (strengthening CAR) and new business lines (such as international trade finance). The bank’s high provision coverage and improving NPA mix also buffer future shocks.

On the risk side, macro and credit headwinds remain. The RBI has recently cut policy rates (expecting ~6.5% GDP growth for 2025–26), which could compress loan margins. A sustained economic slowdown or rise in NPAs (especially from unsecured retail/MSMEs) could hurt earnings. Regulatory uncertainties – notably the AT1 bond case – could impact capital ratios. Competition among private banks is intense, and Yes Bank must deliver consistently to earn market confidence. In the near term, the stock may stay volatile; investors should watch quarterly results and any updates on the SMBC deal.

Conclusion: Yes Bank’s turnaround seems on track – healthy profits, cleaner books, and clear strategic priorities. Its future will depend on executing growth plans while guarding against legacy risks. Analysts’ sentiment is mildly bullish: some expect the stock to gradually recover toward ~₹20–21 (on technical breakout) as credibility improves. For investors, a cautious “accumulate” stance is advised. Yes Bank’s stock forecast may rise if its momentum sustains, but it is best suited for those comfortable with sector risk. As one market expert puts it, Yes Bank’s prospects are improving, but “long-term prospects require close monitoring

---

Market Sentiment and Share Price Trends

The stock has been volatile. Yes Bank shares ended near ₹18.09 on April 18, 2025, but remain down ~24.5% over the past year Investor sentiment largely reflects the bank’s turnaround story and news flow. For example, on May 9, 2025 the stock surged ~8% to a three-month high after reports that SBI and Yes Bank boards would finalize a stake sale to SMBC Technical analysts note that Yes Bank has formed a base in the ₹16–18 band. Many expect that a clear break above ~₹18.2 could trigger a rally toward ~₹21 Foreign institutional interest is modest (FII holding ~27% as of Mar’25), suggesting upside may be tied to incremental institutional buying. Overall, market sentiment is cautiously positive: fundamentals have improved, but the stock’s recent trading range shows that investors remain sensitive to news and execution risk.