Hold YES Bank; target of Rs 59: Prabhudas Lilladher

Prabhudas Lilladher's research report on YES Bank

Yes Bank continued to see high loan slippages of Rs59.5bn into NPA with 60% being from BB & below book and 40% from outside the identified stressed BB & below book which was key negative. Also, the BB & below book saw jump from 9% of exposure to 10% in Q2FY20 and notwithstanding the same, the BBB & below also saw jump of 21% QoQ to 21% of exposure (320bps QoQ jump) due to downgrades from higher buckets. Higher additions to lower buckets & lumpy exposures remains a big risk to asset quality added by sluggish resolutions. By consolidating b/s bank has been able to conserve capital and incremental capital infusion by large investor will help cushion large hits on balance sheet, but we worry it may not suffice.

Outlook

We retain HOLD with TP of Rs59 (unhanged) based on 0.6x Sep-21 ABV.