Yes Bank Q3FY19: Headwinds waning; Buy

LKP Research | Jan. 25, 2019, 12:14 p.m.

Valuation

Only thing awaited now is RBI divergence report on the bank for the year FY18. With the positve outcome on this, even the capital raising concerns on the stock will wane off. Currently, the bank is trading at reasonable valuatons – 1.6x and 1.3x FY20e and FY21e ABV resp. with ROE and ROA of 19% and 1.3% resp for FY21e. We haven’t considered any equity diluton in our numbers so far. We believe Yes Bank is one of the best bet to play corporate cycle recovery. Retain BUY with revised TP of Rs. 290 (as we roll forward our earnings to FY21) discountng FY21e ABV by 1.7x.



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