YES BANK LTD – CMP - 185
This
stock is presently stuck amidst huge turbulent newsflow including rift between
promoters, RBI intervention regarding the same, consequent resignations of
board members, RBI regulatory notices and so on. The stock saw support around
200 from a life high of 400 in 2 months, after it fell below that level, but
soon resumed its decline and tanked to 150 on a bad day, only to rebound to 180
plus levels in next few days.
The stock
is trading at a very attractive PE ratios of 10. The market commentators say
that it’s a corporate bank and not a consumer bank like HDFC Bank, so it is not
commanding the premium like it and so on. However we believe the stock’s fair
value is above 250 and this level is very very attractive to buy for a one year
period or more. Yes bank is not closing down and is here to stay. Buy on all
dips. All the bad news is out discounted, now on only good news is expected. At
worst, the stock may go down again around 150 but as we saw it has great
support at that level. You need to be fearless when buying a great company at
great valuations amidst bad newsflow. It is this type of investments that incur
you above alpha returns.
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