YES Bank: Why investors should not be taken in by rating upgrades

At current valuations, the lender's stock trades at a premium to IndusInd Bank and RBL Bank, leaving little room for error at current multiples

From being placed under moratorium in March to having a new management team that has proved effective on many counts — arresting the run on deposits, bolstering capital adequacy, and charting a new growth strategy — the past six months have been a whirlwind for YES Bank.

It has repaid in full the special liquidity facility (Rs 50,000 crore) availed from the Reserve Bank of India (RBI). Nearly five rating agencies, including Moody’s, have upgraded their ratings on various facilities of YES Bank in a month.

The change appears to have been triggered by the follow-on public offering (FPO) of Rs 15,000