YES Bank target price at Rs 16! Goldman Sachs suggests 41% downside on banking stock

Shares of YES Bank Ltd were trading about 3 per cent lower in Friday's trade, as Goldman Sachs announced a target price of Rs 16 on the private lender, which hinted  a potential 41 per cent downside on the counter.

YES Bank shares fell 2.39 per cent in early trade to hit a low of Rs 26.51 on BSE, before recovering some ground. he stock was later trading at Rs 26.77, down 1.44 per cent. YES Bank shares, which are widely tracked by retail investors, are up 18.37 per cent year-to-date and are up 63.41 per cent in the last one year.

The Goldman Sachs report was broad-based, which covered banks and NBFCs. On private banks, Goldman Sachs said it remained selective and maintained 'Buy' calls on HDFC Bank, Axis Bank Ltd, IndusInd Bank, Bandhan Bank and Kotak Mahindra Bank.

Read more: YES Bank shares 5 factors that may improve its profitability

The YES Bank management recently met with Kotak Institutional Equities at a conference that the latter hosted.

Among the key takeaway was that YES Bank was undertaking a lot of changes to ensure that the past NPL cycle is not repeated. "The checks and balances are lot stronger. Risk and policy decisions are governed by independent heads. There is lot more committee-based approach towards decision making, especially for the larger ticket size loans. Significant effort has been made to debulk the balance sheet and hence this is not getting reflected in higher growth," Kotak noted.

Also read: YES Bank share price target: Monthly chart gives cues on where the stock is headed

On private banking pack as a while, Goldman Sachs said: "We noticed that the asset quality worsened for many private banks on account of normalisation of the credit cycle. However, given that select private bank have aggressively grown their unsecured loans and witnessed an expansion of margin, we believe that as consumer lending goes through a slowdown, unit economics and growth could be a challenge," Goldman Sachs said.

Also read: Goldman Sachs says 'Sell' YES Bank shares, downgrades SBI, ICICI; Buy HDFC Bank, it says