Last Update: January 26, 2023, 2:50 PM IST
Yes Bank shares fall; Should You Hold or Sell?
Yes Bank shares: According to stock market experts, this fall in Yes Bank shares is short-lived as the banking major is expected to recover from its lows.
Yes Bank Share Price: Yes Bank shares are under pressure after climbing to its 52-week high of Rs 24.75 on December 13, 2022. In these roughly one month’s time, Yes Bank shares have fallen by over 30 per cent, while in the YTD time, it has fallen over 16 per cent.
According to stock market experts, this fall in Yes Bank shares is short-lived as the banking major is expected to recover from its lower levels. The decline comes after the Bombay High Court set aside the March 2020 decision of Yes Bank’s administrator to write-off additional tier-1 (AT1) bonds. An 80 per cent fall in profit in the December quarter due to higher provisioning added to the weakness on the counter. Yes Bank had written off AT-1 bonds worth Rs 8,415 crore as part of the bailout in March 2020. While the management said it had strong legal grounds to appeal against the court, investors were cautious.
Yes Bank shareholders to hold shares despite 30 per cent fall from 52-week high, ICICI Securities says, “We continue to deliver on relevant operating metrics driven by improved confidence in granular retail assets as well as liabilities and stability of the franchise.” I see a gradual change. , Post the stressed pool sale, the adjusted book value (adjusted for net NPAs) has been favorably impacted in the range of 8-10%, despite lower earnings generation for FY23E. In addition, raising equity capital of ₹89 billion in Q3FY23 from Carlyle and Advent provides YES with growth and confidence capital. To that extent, the stock can now command a valuation of 1.4x FY24E ABV (1.2x earlier).
Pointing to the challenges that Yes Bank shares may face, ICICI Securities said, “Delayed resolution of stressed pool, incremental aging provisions, modest ROE profile during transition, write-down Are aware of the risks arising out of the decision to do so. AT-1 bonds are being challenged in court following expiry of lock-in shares in March 23 and overhanging stock supply. Revised target of ₹19.3 per share Hold on with the price.”
Meanwhile, Nirmal Bang Institutional Equities said in a note, “The management indicated that the bank is in the process of appealing to the Supreme Court against the recent High Court order, which restricted the issuance of additional tier 1 bonds (AT1) rights.” -Off was rejected. Margin. We keep the bank ‘under review’ as we seek further understanding on the provisioning implications of security receivables which could impact profitability.”
Kotak Institutional Equities said the 80 per cent fall in Yes Bank’s earnings was largely due to higher provisions.
“The bank completed sale of bad loans to ARCs resulting in significant reduction in headline NPL ratio and also raised capital for growth. We turn our attention towards the development and generalization of ROE. Improvement to normalcy with negligible credit cost appears to be a few years away,” it said while maintaining a sell on the stock with a fair price of Rs 17 from Rs 16 earlier.
Yes Bank’s consolidated December quarter profit came in at Rs 55.07 crore as provisions on inherited bad assets set it a higher amount as provisions. It reported an 11.7 percent jump in core net interest income at 2.5 percent to Rs 1,971 crore, with a 10 percent advance growth and a 0.10 percent increase in net interest margin.
read all latest business news Here
