State Bank of India’s (SBI) lock-in of Yes Bank of three years is ending today. The market is rife with speculations that after the end of the three-year lock-in, SBI would post at least partial profit if not full profit, which could lead to further fall in Yes Bank share price, which is already on high since summer. is since. The Supreme Court stayed the decision of the Bombay High Court, which in January had written-down AT-1 bonds of Yes Bank worth over Rs 8,300 crore.
Similarly, the three-year lock-in of bank shareholding in Axis Bank, ICICI Bank, IDFC First Bank, HDFC Bank etc. is also ending this month.
Hence, market experts say that there will be selling pressure in Yes Bank shares in the next few sessions.
SBI Ltd, which initially acquired 49 per cent stake in Yes Bank, will hold 26.14 per cent stake in the private bank as of December 31, 2022. SBI was required to retain at least 26 per cent stake in Yes Bank for three years.
To recall, the rapidly deteriorating financial position of Yes Bank relating to liquidity, capital and other critical parameters and the absence of any credible plan for infusion of capital had compelled the RBI to take immediate action. SBI was allotted shares worth Rs 7,250 crore at a price of Rs 10 per 725 crore shares. It was mandatory for the PSUs not to reduce their stake below 26 per cent before the completion of three years.
A total of 395 crore shares were allotted at Rs 10 each to seven other lenders. A total of 75 per cent of the equity shares allotted to each such investor were subject to a lock-in of three years with effect from March 13, 2020. The remaining 25 per cent shareholding allocated to each investor was freely transferable.
Mortgage lender HDFC and private lender ICICI Bank had bought shares of Yes Bank worth Rs 1,000 crore each. Axis Bank invested Rs 600 crore in Yes Bank while Kotak Mahindra Bank bought shares worth Rs 500 crore. Federal Bank and Bandhan Bank invested Rs 300 crore each while IDFC Bank invested Rs 2,500 crore in the bank.
What should investors do now?
Amar Dev Singh, Head Advisory, Angel One, said Yes Bank shares have seen volatility of late, as the three-year lock-in period for some private banks is expiring in March 2023. The stock is down 20 per cent year-to-date.
“Looking at the upcoming Q4 numbers of the bank, investors may decide to hold the shares as after SBI management took over the reins, there has been a marginal improvement in the fortunes of the bank. Besides, the finance ministry’s mechanism to handle bad loans is also likely to help Yes Bank in the medium term. Technically, the stock seems to be consolidating in the range of Rs 15 to Rs 25. Investors can book profits at higher levels.
Girish Sodani, head of equity markets at Swastika Investmart, said: “The financial position of Yes Bank has improved and the bank has a long way to go to become a profit making bank. Hence, SBI, ICICI Bank, HDFC Bank, IDFC First Bank cannot sell their entire holding at random. In fact, the rally was led by improving asset quality and a record increase in advances. As Yes Bank stock has given a return of 24% in the last 1 year. Post the bank’s bailout in 2020, Yes Bank’s earnings have improved significantly, sharing its business update for Q3FY23 that its advances were up nearly 12 per cent (YoY) and over 2 per cent (QoQ). On December 22, the bank statement transferred stressed assets worth Rs 48,000 crore to JC Flowers Asset Reconstruction Pvt Ltd, a move that would clear the bank’s books of bad assets to help its restructuring model. Especially on the asset quality front. Fund infusion of Rs 9,000 crore by PE firms has further strengthened the capital.”
Sodani further mentioned that “So due to this news holding of retail investors in the stock may see some profit booking or even partial booking but as we expect investors will have to wait for Q4FY23 results of Yes Bank . Only after this they can take a decision regarding profit booking. Because keeping its stake unchanged after the end of the lock-in period may trigger fresh buying in Yes Bank shares. Other experts said that Yes Bank share price can see a huge jump and can go towards 20 to 25 levels in the medium term.
Commenting on Yes Bank share price outlook, Avinash Gorakshkar, Head of Research, Profitmart Securities said, “Yes Bank shares are looking strong despite SBI’s three-year lock-in ending today and few more banks lock-in.” These are expiring in next one week..This is an indication that these banks have taken exposure in Yes Bank to recover from bad loan crisis.Just because after taking exposure of SBI and others Yes Bank shares has rallied over 60 per cent, does not mean immediate profit booking after the end of the three-year lock-in. In my opinion, these banks will wait till Yes Bank’s Q4 FY2023 results Can do that, and only then can they take a decision regarding booking profit.”
Recommends Yes Bank shareholders to keep an eye on the development AT-1 binding Write-off case in Supreme Court, GCL Broking CEO Ravi Singhal said, “Major headwind for Yes Bank shares Mumbai High Court set aside its decision to write-off AT-1 bonds worth around Rs 8,300 crore Is done. The Supreme Court has stayed the Bombay High Court’s order asking both RBI and Yes Bank to explain the rules under which they were allowed to write off AT-1 bonds. The recent fall in Yes Bank should be viewed from this angle, rather than as a spurt in the three-year lock-in of SBI or other banks.
Advising bullish investors to buy on dips, Ganesh Dongre, Senior Manager – Technical Research, Anand Rathi said, “Yes Bank share price has taken strong support near Rs 15 per share. Hence, those who have this stock in their portfolio are advised to maintain stop loss at Rs 15 and keep accumulating on every major decline as the stock is showing an upward trend on the chart pattern. For those who want to enter Yes Bank, the drop in share price from Rs 15.50 to Rs 16 will be a great opportunity for such new investors. If the stock falls below Rs 15 level then I suggest to accumulate more around Rs 13 to Rs 13.50 level while maintaining stop loss of Rs 12 because if there is any speculative fall then we will buy YES BANK Can see a sharp jump in the share price of. Happens in banking stocks in coming sessions.”
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