Yes Bank Share Price: Talking stock: YES Bank a 3-year play; sell IEX, buy BSE

I suggest adding more shares to reduce average cost as I believe that divestment of Japanese business is significantly positive and it would be able to resolve most of regulatory issues of US FDA in about 18 months’ time. While short-term target could be around Rs 900, which is around 21 times FY2021E EPS, the stock could recover beyond Rs 1,100 in 2-3 year period.

I bought 100 shares of IEX at Rs 178. Shall I buy or wait for correction? JAYDEEP BHATTACHARJEE


You may sell IEX and use proceeds to buy BSE, which is much cheaper than IEX in terms of valuation multiple. While BSE trades around 17 PE, IEX trades over 28 PE on expected earnings of FY2020. BSE is evolving as an exchange, offers dividend yield of around 5.5 per cent, and its cash holding and current market value of CDSL together exceed its market cap substantially.

I am holding 500 shares of Aditya Birla Capital at Rs 175. Can I purchase more for average? H N JAJU


Aditya Birla Capital is trading around 2.3 times of its book value. The fair value is around Rs 120 in my view.

I hold 18,000 shares of Yes Bank at an average cost of Rs 203. Is there any likelihood of recovering my investment over next one year? RAJEEV BATRA


Yes Bank is trading around 0.5 times price-to-adjusted book value. It is very difficult for an analyst to predict whether any new investor would come into Yes Bank at a good price with substantial resources and to forecast what would be the quantum of incremental stress from NPAs in the next two quarters. However, even if the bank faces another 30 per cent dent on its current net worth in terms of additional NPAs, its price-to-adjusted book value would be still around 1time. Hence, if you are a risk-taking investor, you may hold on to Yes Bank for long-term (2 to 3 years) to possibly recover a significant portion of cost.

I hold shares of IDFC First Bank at Rs 45 and my investment horizon is 5 years. Can it turn out to be a dark horse? OJAS AGARWAL


You may hold it with a target price of around Rs 65, which is close to 2 times its current adjusted book value. Renewed competition from both existing and new banking players, almost peak out of banking penetration in urban centres and huge equity capital base of the bank will act as a drag for any upside beyond Rs 65.

I have 5,500 shares of R Systems at Rs 54. Please advise. MALAIARASAN


You may exit R Systems if it moves to around Rs 75 as it already trades around 1.2 times enterprise value-toannual revenues and at a PE valuation of around 17x current year’s earnings. These valuation multiples are higher than other mid-sized IT companies like Cyient .

I am holding CSB Bank at Rs 292, Future Retail at Rs 412, Havells India at Rs 662 and Oriental Bank at Rs 54. Should hold or sell? N S KHANNA


If CSB moves up 5 per cent to10 per cent from the current level, please sell it as it trades at the costliest valuation of over 2.5 times price-to-adjusted book value in the old private sector banking space. Considering the substantial fall in the stock price and significant fall in valuation multiple to 26 times current year earnings and also the business collaboration with Amazon, you may hold Future Retail stock till it recovers your cost price. I find PE multiple of over 52 for the current year’s expected earnings quite stretched considering poor year-or-year revenue growth, and hence, suggest selling the stock, if Havells India moves close to your cost price. Hold Oriental Bank for one to two years with a target price of around Rs 73, which is 1 time the current adjusted book value. I firmly believe that the PSU banks would be able to finally come out of the rising NPA stress within 12 to18 months and then start rectifying significant discount seen in their market prices in relation to their adjusted book values.

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