Accumulate YES Bank; target of Rs 250: Prabhudas Lilladher

Prabhudas Lilladher's research report on YES Bank

Yes bank's outcome of board meeting has left several loose ends and prolongs uncertainty regarding the succession. It has recommended 1) establishment of committee to search & select a new MD & CEO and 2) request to RBI an extension for the MD &CEO up to April'19 at least to review the FY19 audited results and a further extension upto Sept'19 (till AGM) to oversee transition 3) appointed Mr. Rajat Monga & Mr. Praloy Mandal as EDs as a part of a long term succession planning. However, the board has not been able to give a clear picture on the succession and further course for the bank. The timelines and uncertainty on approvals from RBI for both MD & CEO (should be difficult) and EDs will keep near term stock performance muted.

Outlook

We downgrade Yes Bank to ACCUMULATE (from BUY) with TP of Rs250 based on 1.8x FY20ABV (from 2.7x multiple).