Hold YES Bank; target of Rs 101: Prabhudas Lilladher

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Prabhudas Lilladher's research report on YES Bank

Yes Bank recognized Rs62.3bn of slippages with large part coming from the watchlist and partly from BB & below book (non watchlist) impacting overall asset quality sharply. The bank also saw its BB & below book loans assets increase on net basis to 9.4% from 8.3% in Q4FY19 which puts asset quality under high risk as these are extremely lumpy exposures. On our deep dive we believe only certain part of exposure can be resolved quickly, while large part of exposure slipping into NPAs remains a high chance which we have factored in the same over FY20 & FY21. Although we take comfort from imminent capital raise (we build-in Rs30bn in near term) & operating profit would help mitigate large provisioning requirement and should not see capital deterioration.

Outlook

We upgrade to HOLD (from REDUCE) with revised TP of Rs101 (from Rs190) based on 1.0x (from 1.5x) Mar-21 ABV.

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