Yes Bank likely to test Rs 407

With 18.4 percent capital adequacy (tier-1 13.2 percent), the bank is well capitalised for 30 percent loan growth over FY’19-20. Our April 2019 target of Rs 407 is based on the two-stage dividend discount model.

Strong traction in Yes Bank’s balance sheet continues. Asset quality as one of the best in the industry among corporate lenders persists. The credit book increased 54 percent YoY, driven equally by its corporate and commercial books. We believe the growth momentum would persist.

Deposits rose 40.5 percent YoY with strong traction in CASA deposits. We expect its retail-deposit franchise and granularity in deposits to further improve.

The GNPA ratio improved to 1.28 percent (down 24bps YoY, 44bps QoQ). We expect the bank to maintain stable asset quality over FY19-20.

With 18.4 percent capital adequacy (tier-1 13.2 percent), the bank is well capitalised for 30 percent loan growth over FY’19-20. Our April 2019 target of Rs 407 is based on the two-stage dividend discount model. This implies a 2.7x P/ABV multiple on its FY20e book.

MORE WILL UPDATE SOON!!

Comments

Buy Axis Bank for target of Rs 725

Stock can be bought at current levels and on dips to Rs 620 with stop loss below Rs 600 for target of Rs 725 levels. Axis Bank has formed symmetrical triangle pattern on weekly chart and trading in a range of Rs 650 and Rs 350 odd levels for almost three years now. On daily chart stock has seen sharp bounce back from 200-day moving average. For last couple stock has been facing at Rs 640-650 zone but forming higher lows. Thus, forming bullish ascending triangle pattern on daily chart. Relative strength index and Stochastic have given positive crossover with their respective averages on daily chart. On monthly chart ADX ine indicator of trend strength is moving up from neutral level of 20 suggesting strength emerging long term trend. Thus, stock can be bought at current levels and on dips to Rs 620 with stop loss below Rs 600 for target of Rs 725 levels. MORE WILL UPDATE SOON!!

Accumulate ABB, target Rs 1,370

Traders can accumulate the stock in the range of Rs 1,230-1,240 for the target of Rs 1,370 and a stop loss can be placed below Rs 1,182. On the weekly chart, an engulfing pattern is visible in ABB which suggests waning bearishness among the traders. On the daily chart, the price has moved above 13-EMA in its recent price action which shows the growing optimism in the stock. In addition, positive divergence is visible in the momentum indicator RSI (14), on the daily chart. Traders can accumulate the stock in the range of Rs 1,230-1,240 for the target of Rs 1,370 and a stop loss can be placed below Rs 1,182. MORE WILL UPDATE SOON!!

Buy Ajanta Pharma

We believe Ajanta Pharma is in a sweet spot and this valuation justify for the company and have a buy rating. USFDA cleared Ajanta Pharma’s Dahej facility which was built with a capex of Rs 500 crore. While, the first block of its Guwahati facility which is dedicated for derma products started production during FY18, while the second phase’s expansion is underway and may see stabilisation by October 2018, company expects a contribution will start coming in FY20. Apart from ramping up facilities and increasing capex company has also plans to acquire brands in India and abroad to supplement growth. In India, most of its core brands have stabilised and are showing growth. Management also aims to strengthen its domestic presence. Apart from spending over Rs 800 crore in the last three years, it further plans to do capex of Rs 500 crore over a couple of years. Most of this capex will be spent on Guwahati facility’s second phase. We believe Ajanta Pharma is in a sweet spo...

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