Yes Bank share price jumps after sale of NPA to JC Flowers. Buy, sell or hold?

According to stock market experts, Yes Bank shares are rising today due to the new break about the private lender concluding sale of NPA to JC Flowers Asset Reconstruction Private Limited, which is expected to pull down Yes Bank’s GNPA below 2 per cent and net NPA below 1 per cent. However, they said that Yes Bank shares’ current PE multiple is very high and one should wait for some profit-booking in the scrip as ideal long term buying zone for the banking stock is ₹18 to ₹18.50 apiece levels. They said that high risk investors can start accumulating Yes Bank shares from ₹20 to ₹18 zone for one year target of ₹44 apiece.

Speaking on the reason for rise in Yes Bank shares, Manoj Dalmia, Founder & Director at Proficient Equities said, “Yes Bank share price rally was widely expected as the private lender has concluded selling of its NPA to JC Flowers Asset Reconstruction Private Limited. This development is going to work as a huge positive fundamental strength for the stock as it will bring down GNPA of Yes Bank below 2 per cent and net NPA below 1 per cent. However, one needs to look at the PE multiple at which the stock is standing currently.”

Manoj Dalmia said that Yes Bank share price is standing at current PE multiple of 40, which is quite high from its peers. Yes Bank EBIDTA is at 19.10, which is at par with its peer Axis Bank but much higher than IndusInd Bank. However, the private bank’s board has approved an equity capital raise of ₹89 bn (US$1.1bn) from Carlyle and Advent International funds.

Yes Bank share price target

Advising fresh investors to wait for some profit booking in Yes Bank shares, Ashish Gupta, Volatility Trader and Derivatives Expert said, “Yes Bank after the takeover by SBI has moved alongside the PSU banking group. If we look at the chart of Yes Bank below, it had faced multiple resistances at 15 followed by a failed breakout and then broke out finally above 15 on 22nd Aug which was sustained. This breakout above 15 was followed by a consolidation between 15 and 18 and then a further breakout. Currently priced at ₹21.2, it might look a bit stretched out and a pullback towards ₹18-18.5 should trigger a good entry with stop loss at ₹15 on a daily closing basis.”

Advising long term investors to buy Yes Bank shares in ₹19- ₹18 range, Ravi Singhal, CEO at GCL Securities said, “Yes Bank share price has risen a lot in recent sessions and profit booking is widely awaited in the scrip. One can buy the scrip in ₹19 to ₹18 zone for medium term target of ₹33 and long term target of ₹44 apiece.” Ravi Singhal of GCL Securities said that high risk investors can start accumulating Yes Bank shares from ₹20 to ₹18 range.

In recent exchange communication, Yes Bank informed Indian bourses about the sale of NPA to JC Flowers ARC citing, “Pursuant to the earlier decision of the Bank to declare JC Flowers Asset Reconstruction Private Limited (“JC Flowers ARC”) as the winner of the Swiss Challenge process, the Bank has now concluded assignment of identified stressed loan portfolio of the Bank aggregating to up to ₹48,000 Crores as on March 31, 2022 under 15:85 structure, after adjusting recoveries between 1st April 2022 to 30th November 2022.”

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.