YES Bank FPO: Don't judge it on the basis of price discount alone

NPA-adjusted valuations are not attractive; asset quality is a concern

YES Bank’s shares tumbled over 13 per cent on Monday upon the lender’s Friday announcement of a Rs 12-13 per share price band for its Rs 15,000-crore follow-on public offer (FPO). The price for the FPO, which opens on July 15 and closes on July 17, indicates a hefty 41-46 per cent discount over its current price of Rs 22.10. 

Though the discount suggests some potential short-term gains, concerns over YES Bank’s asset quality — which may worsen due to Covid-19-triggered disruptions — offer little comfort, say analysts.

According to Deepak Jasani, head of research-retail at HDFC Securities, “YES Bank’s FPO pricing