Citi has maintained its Sell rating on Yes Bank with a target price of ₹22, even as the lender focuses on improving the quality and durability of its balance sheet. According to reports from Citi, the target price implies a 1.2x multiple on September 2027 adjusted book value, based on its two-stage Gordon Growth Model. On Wednesday, Yes Bank share price ended 0.17% higher at ₹23.24 apiece on the BSE.
At Citi's India Financials Investor Forum 2026, Yes Bank CFO Niranjan Banodkar outlined a 'quality over velocity' approach, with the bank prioritising granular deposits, diversified funding tenors and sustainable long-term earnings over headline growth. As reported by Citi, the brokerage expects Yes Bank to garner less than 2% of the industry's incremental FCNR mobilisation, estimated at around $2 billion or 6% of deposits. Around 75% of the mobilisation is estimated to be leveraged, with the bank planning to deploy liquidity across government securities, tactical short-term corporate lending and, gradually, long-term loans. However, Citi expects the excess FCNR liquidity and leverage at the International Banking Unit (IBU) to weigh on margins temporarily, with pressure expected to normalise over the next two quarters as liquidity is redeployed into loans.
According to Citi's analysis, retail disbursement growth has re-accelerated to 27.5% year-on-year (YoY), although the retail loan book grew a more modest 6.9% YoY due to higher run-offs. The brokerage expects high-single-digit retail loan growth by FY27-end, potentially moving into double digits by mid-FY27 and reaching 15% or more thereafter. Citi also expects the implementation of the Merchant Discount Rate (MDR) to be fee-accretive, estimating a low-to-mid single-digit uplift to operating profit. Credit costs are expected to remain anchored at 50 basis points or lower, excluding security-receipt-related volatility, with no fresh asset-quality stress anticipated.
As reported by Citi, the bank remains focused on improving core profitability while reducing the impact of treasury and SR-related volatility. The verdict on AT1 instruments remains pending, while the collaboration with SMBC is gaining momentum across origination, best-practice sharing and ecosystem access. Key upside risks that could sustain the shares above Citi's target price include improvement in overall asset quality, net interest margins (NIM) improving despite structural headwinds, and higher-than expected growth resulting in superior RoA profile. According to Citi, these factors could help the bank achieve its strategic objectives while maintaining its current market position.
