SynopsisYes Bank shares rose after reporting a strong March quarter with sharp growth in net profit and net interest income, alongside improved asset quality. However, brokerages remain cautious, citing expensive valuations, reliance on recoveries, and below-industry growth, raising concerns over the sustainability of profitability and near-term upside potential in the stock.Listen to this article in summarized formatAgenciesYes Bank jumps on strong results, but brokerages remain cautious.Shares of Yes Bank jumped as much as 3% to their day's high of Rs 20.82 on the BSE on Monday after the private lender reported a 45% year-on-year surge in net profit to Rs 1,068 crore for the January-March quarter of FY26, although brokerages continue to remain cautious.The company on Saturday reported a 16% YoY rise in net interest income to Rs 2,638 crore for the quarter under review. Net interest margin (NIM), meanwhile, gained 20 bps to 2.7%, while asset quality improved. Gross non-performing assets (NPA) ratio declined 30 bps YoY to 1.3% while net NPA ratio declined 10 bps to 0.2%.Also Read | Yes Bank Q4 Results: Net profit rises 45% to Rs 1,068 crore, NII up 16% YoY Yes Bank’s earnings have beaten estimates. The private lender was expected to report a 9-12% YoY rise in NII and a 4-44% YoY surge in net profit, according to estimates by several brokerages.Morgan Stanley on Yes BankDespite the strong results, brokerages continued to remain cautious. Morgan Stanley remains ‘Underweight’ on the stock, with a target price of Rs 15 apiece, according to the brokerage note cited by ET Now. This implies a downside potential of nearly 26% from the stock’s previous closing price of Rs 20.19 apiece on NSE. The international brokerage said that the company’s core operating performance was in line with estimates, while PAT missed expectations by 2% due to one-off provisions. It said the 45% growth in net profit was supported by higher net interest income, while the improvement in NIM was aided by deposit repricing and CASA growth.Morgan Stanley added that the asset quality overall improved, although slippages were slightly higher on a sequential basis. It expects a gradual recovery in profitability. However, the international brokerage highlighted that the valuation remains expensive at 1.1x FY27 book as against sub-par return ratios. It said Yes Bank’s growth is still below industry levels, and the sustainability of the momentum will be a key monitorable.JM Financial on Yes BankJM Financial, meanwhile, maintained its ‘Sell’ rating on the stock, but increased its target price to Rs 17 apiece from Rs 16 apiece. The latest target price implies a downside potential of nearly 16% from the stock’s previous closing price.The domestic brokerage noted that the company’s strong PAT growth was led by a sharp rise in NII and lower-than-expected opex, more than offsetting higher provisions. “Management has guided for lower SR recoveries of INR8-10bn in FY27F, which may negatively weigh on its FY27 credit cost,” it noted. Highlighting expensive valuations, JM Financial said, “A significant portion of the current earnings uplift is driven by SR recoveries, which are finite. With the recovery pool nearing exhaustion and core performance remaining weak, the sustainability of near-1% RoA continues to be uncertain. We believe the stock is discounting a structurally stronger profitability profile that is yet to be demonstrated without recovery-led support.”Also read | AT-1 case: Yes Bank does not expect material financial impact from Supreme Court ruling Yes Bank shares have gained over 8% in one week and nearly 10% in one month. The stock is, however, down more than 5% in 2026 so far.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times.)Read More News on(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. 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