Dolat Capital is bearish on Yes Bank has recommended sell rating on the stock with a target price of Rs 160 in its research report dated April 30, 2019.
Dolat Capital's research report on Yes Bank
The bank reported a loss as higher provision on early recognition of stressed assets led to a rise in credit cost. The new MD, Mr. Ravneet Gill appears to be poised to change the DNA of the bank and adopt his MNC experiences. The bank is likely slowing the corporate asset growth, due to capital constraints, and is realigning corporate products. The bank has also aggressively recognized stressed assets and is likely to continue to assess losses based on time value erosion. The bank is further likely to invest in network and feet on street for liabilities. During the transition, it plans to invest heavily in branches and liabilities, even as its business slows and provisions for previous excesses rise.
Outlook
On a lower growth momentum and a weaker RoA, we reduce our multiple to 1.5x from 2x FY21E P/ABV, and downgrade to Sell. The result of the transition from an Indian corporate bank to a bank with a MNC flairs sweeter in the long term. But investors are likely to await more visibility on the milestones the bank has placed. We currently factor no capital raise.
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