I once encountered the same kind of sidewall issue with newly purchased S-707 Yokohama tyres. They were bought from Japan tyres, Blue Area, Islamabad. I was told by the guy at Japan Tyres that sidewall issues are not covered under warranty if there is some outer damage (like the one in your pic). There was no damage in my case, they were asking me to get it repaired but after some hard discussion, they replaced the tyre. After some weeks again a side wall bubble appeared in another tyre. So I sold them all and bought new tyres. Now I am using SONAR PRIMAX SX608 Taiwan tyres and quite satisfied with them.
You should also replace the tyre. Don't go for repairs.
