New Delhi: Shares of YES Bank advanced over 3 per cent in early trade on Friday after Edelweiss Securities upgraded the lender to Buy with a target price of Rs 101, indicating an upside of 40 per cent from the current market price.The scrip was trading 3.21 per cent up at Rs 72.30 at around 9.20, while the benchmark BSE Sensex was down 112 points, or 0.27 per cent, at 41,021 at around the same time.The brokerage house perceives YES Bank as a high risk-return potential candidate as base-case holds out the bank is here to stay, braving the known and unknown challenges and a temporary lull in earnings.At its current 0.8 times FY21E P/B, the stock factors in multiple challenges and a clear under-valuation of its liability franchise.
The m-cap-to-deposit at sub-10 per cent lowest among peers starkly reflects the under-appreciated franchise value.
Once it navigates the challenges, the revamped business model would emerge stronger, sustainable and less volatile, Edelweiss said in a report.The board of YES Bank is also meeting today to consider raising of funds.In a filing to the BSE on Tuesday the bank said, notice is hereby given that a meeting of the board of directors of YES Bank will be held on Friday, November 29, 2019 at Mumbai, inter alia, to discuss and consider raising of funds by issue of equity/ equity-linked securities through permissible modes, subject to necessary shareholders/ regulatory approvals, as applicable."One of the key risks to our Buy call is the banks ability to raise capital as any upset thereof will restrict its ability to clean up the balance sheet and limit growth options, Edelweiss said in a report.