shares of Yes Bank It has gained 28 per cent in five trading sessions. According to stock market experts, the rally in Yes Bank’s share price can be attributed to three major news stories – Private equity (PE) conglomerate considering acquiring 10 per cent stake in Carlyle Yes Bank, Kotak Mahindra Bank board approval to pump ₹500 crore into Yes Bank and the recent rating upgrade by CARE rating agency across its debt instruments from BBB to BBB+. He added that Yes Bank shares have given a fresh breakout at Rs 15 and it is currently showing an ‘uptrend’ on the private lender’s stock chart pattern.
Analysts, however, have mixed views on the bank’s profitability, even though net interest income (NIM) grew in the March quarter due to a favorable base effect. Analysts said the net interest margin (NIM) may improve sequentially.
ICICI Securities said improved collection trends, reduction in overdue pool and better recovery and upgradation should support the gradual decline in gross non-performing assets. For the quarter, it sees gross NPAs at 14.7 per cent, similar to the previous quarter.
It sees a profit of Rs 170 crore for the quarter as compared to profit of Rs 266.40 crore and Rs 3,787.70 crore in the year-ago quarter. NII is growing by 70 per cent to Rs 1,680 crore as compared to Rs 986.70 crore in the same quarter last year.
Emkay Global expects the bank to post a loss of Rs 12,000 crore in the fourth quarter. “Slower growth, softer margins and higher credit costs can lead to deep losses for the bank. The slippery remains high,” it felt.
According to stock market experts, Yes Bank’s share price rally can be attributed to three major news stories – Private equity (PE) conglomerate Carlyle contemplating acquiring 10 per cent stake in Yes Bank, Kotak Mahindra Bank board said. Approved to pump 500 crores in Yes Bank. And recently CARE Rating Agency upgraded its debt instruments from BBB to BBB+. He added that Yes Bank shares have given a fresh breakout at Rs 15 and it is currently showing an ‘uptrend’ on the private lender’s stock chart pattern.
Speaking on the reason for the increase in the share price of Yes Bank; Ravi Singhal, Vice Chairman, GCL Securities, said, “Yes Bank share price is rising today on news that PE group Carlyle is looking to buy 10 per cent stake in the private lender with an investment of $500 million from Carlyle. Street is buzzing with this news and today’s rally in the stock can be attributed to this news. The market is seeing this stock as a good sign for investors as we have approved the board of Kotak Mahindra Bank for Rs 500 crore in the private lender. Hence, from the investment front these two developments are acting as major catalysts for the share price rally of Yes Bank.”
Hinting at rumors related to mergers and acquisitions, shares of Yes Bank are swirling; Santosh Meena, Head of Research, Swastika Investmart Ltd said, “Yes Bank has been growing rapidly since last few days as there are rumors of its acquisition by a big player. We are witnessing many mergers and acquisitions in the BFSI industry, hence the number of mergers and acquisitions of Yes Bank. In fact, the banking sector is looking at a very good stage for multi-year growth after a long period of pain, where we can expect better performance of smaller banks like Yes Bank in future. Or we can say that the worst case scenario is behind this company, therefore, some investors are seeing it as a bargain buy.”
Sharing the key levels on the technical chart pattern, Santosh Meena said, “Technically, Yes Bank stock has broken a crucial barrier of Rs 15, leading to a move from Rs 17 to Rs 20 levels in this counter and more. May accelerate. On the downside, Rs 15 should act as an immediate and strong support level, while Rs 13 will be a key support level.”
How Rating Upgrade Has Driven Yes Bank Share Price Rally; Sonam Srivastava, Founder, Right Research, said, “Yes Bank shares have gained over 20 per cent in a week after rating agency CARE upgraded its debt instruments from BBB to BBB+. The upgradation is due to steady improvement in profitability with stable asset quality parameters and stable performance of the bank’s operations and business growth amid concerns over COVID-19 related stress, the agency said. However, the bank still has a major chunk of stressed advances, which need to be monitored.”
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