Yes Bank Share Price: Will it touch Rs 100?

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Yes Bank

Yes Bank Share Price: What is happening?

Yes Bank shares has been one of the biggest wealth destroyers for investors as the share price has fallen more than 95% from its peak. However, in the last one months, we have seen a reversal. The stock has gained more than 30% in one month. A lot is happening within the bank and for the investors. Let us look at the details. On Wednesday, Yes Bank share price ended 1.54% higher at 16.45 after Crisil upgraded the ratings of Yes Bank, and revised its outlook to ‘positive’. 

Quick fact: Yes Bank shares have gained more than 20% in the last week to hit their highest level since January 2021. The shares soared to a 52-week high of Rs 17.90 on Tuesday, on the back of reports of PE giants infusing $1.1 billion in the private lender. 

Let's deep-dive into Yes Bank share price movement:

Why did Yes Bank share price fall?

In August 2018, Yes Bank share was trading at over Rs 350 per share. Then, MD and CEO (Rana Kapoor) vowed never to sell his single shares. Bank’s financial conditions began declining and the bank was not able to raise capital to address potential loan losses and resultant downgrades, deposit withdrawal, and triggering invocation of bond covenants by investors. 

Many companies failed to repay their loans including Dewan Housing Finance, CG Power, Essel group, and the Anil Ambani group companies. The bank's financial conditions started going down starting in 2019, and the impact was seen in the share price.

Why is Yes Bank's share price increasing in the last week?

The share price of Yes Bank is increasing because of all the positive news that is floating around. Let us look at all the details:

Selling bad loans: In July, the bank announced that it plans to sell its Rs 48,000 crore of bad loans at a value of Rs 11,100 crore. Recently, the bank signed a term sheet with JC Flowers Asset Reconstruction (ARC) as its joint venture for the sale of bad loans. After the sale is completed, the gross NPA, which was 13.4% at the end of the June quarter, will fall below 2%. With a clean book, the bank will be able to start fresh.

Fundraising: Yes Bank can raise fresh capital with the clean books, which it has planned. Last week, Yes Bank announced a fundraise of $1.1 billion or Rs 8900 crore from two global private equity players - Carlyle and Advent International. Each investor will acquire up to a 10% stake in Yes Bank. The amount will be raised through a combination of Rs 5,100 crore in equity shares and Rs 3,800 crore through equity share warrants. Both Carlyle and Advent International will have one nominee on the bank's board after the transaction is completed.

SBI to stay invested in Yes Bank: SBI is allowed to reduce its stake in Yes Bank at the end of FY23. Currently, SBI holds a 26% stake in Yes Bank. Most investors were worried that if SBI decides to reduce its stake in Yes Bank, it would have a negative impact on the bank. However, Yes Bank's MD and CEO, Prashant Kumar, has said the SBI will remain invested with Yes Bank beyond March 2023. It is another positive and big piece of news for investors.

Aditya Puri may join the Yes Bank board: As mentioned above, the private investors have the option to nominate one member on the Yes Bank's board. Aditya Puri, the man behind the success of HDFC Bank, is a senior advisor at Carlyle Group. As per reports, he may get a seat on Yes Bank of Carlyle's behalf. The names will be recommended soon to the nomination and remuneration committee. The news is positive for Yes Bank investors as Aditya Puri has years of experience in running a successful bank. 

Yes Bank share price insight

Out of 990 trading days that Yes Bank has seen in the last 4 years, below are the Yes Bank share price movement insights:

  • Yes Bank share price ended in green on 413 trading days
  • Yes Bank share price ended in red on 517 trading days
  • Yes Bank share price remained unchanged on 59 days

Update from Yes Bank's Q1FY23 earnings:

  • Profit increased: Yes Bank reported a net profit of Rs 310.63 crore in the June quarter, up 50.17%.
  • Net Interest Income rises: The Bank reported NII of Rs 1,850 crore, up 32% year-on-year (YoY). 
  • Asset quality improves: The bank’s gross NPA ratio stood at 13.4%, compared with 15.6% in Q1FY22 and 13.9% in Q4FY22. 
  • Deposit Rises: Yes Bank's net advances for Q1FY23 stood at Rs 1.86 lakh crore, a growth of around 3% on quarter and 14% year on year. 

Should you Buy, Sell or Hold Yes Bank stock?

Technicals: Yes Bank shares have broken their previous 52-week high of Rs 16.25 per share levels and have been able to sustain above Rs 16.25 levels. The stock has a strong support zone around Rs 15 levels and it is a news-based stock with improved fundamentals.

ICICI Securities: The firm has given a HOLD rating on Yes Bank with a target price revised upwards to Rs 15.7 from Rs 14 per share. The brokerage sees a turnaround in relevant operating metrics and improved confidence in the stability of the franchise. Positivity is setting in for Yes Bank with the proposed equity capital raise. This confidence, as well as growth capital, will boost CET-1 by 3.84% to almost 15.7%.

Nirmal Bang: The firm has given a SELL rating to Yes Bank with a target price of Rs 13.4 per share. The firm said that despite the better-than-expected results and the bank's improving overall picture, they find medium-term ROA targets unattractive given the investable opportunities available with larger banks.

Edelweiss: The firm has given a REDUCE rating with a target price of Rs 12 per share. Its RoA estimate changes from 0.3% to 0.6% for FY23E, but is still lower than the guidance of 0.75%. They are less upbeat on CASA given rising rates and believe capital-raising and the transfer to ARC are long-term positives but would take time to play out.

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The stock recommendations in this blog are by the respective research analysts and brokerage firms. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.

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