Yes Bank Stock: Yes Bank, one of India’s leading private sector banks, is expected to see volatility in its shares as the three-year lock-in period comes to an end on March 13, 2023. A report by ICICI Direct noted that the bank is poised to experience higher advance growth driven by granular retail assets. The report further stated that the bank’s focus on growth with margin improvement could enable it to improve its Return on Assets (RoA) to guidance of 0.9-1% in FY25.
As of Monday, the bank’s stock was trading at Rs 16.95 on the NSE and was up 10 paise or 0.59% from Friday’s closing price. Under the Reserve Bank of India’s ‘Reconstruction Scheme 2020’, a consortium of eight banks led by government-owned lender State Bank of India (SBI) executed equity commitments in Yes Bank. SBI initially purchased shares worth Rs 6,050 crore for a 48% stake in the bank at a consideration of Rs 10 per share.
According to the scheme, SBI cannot reduce its holding below 26% before the completion of three years from March 14, 2020. SBI equity has reduced to 26% as of December 2022 due to fund-raising dilutions over time, as noted in the ICICI Direct report. The report further mentioned that Yes Bank has witnessed gradual improvement in business growth as well as asset quality in the last six quarters. Recently, the bank concluded the sale of stressed assets to JC Flower, which has led to a substantial reduction in Gross Non-Performing Assets (GNPA) to 2%.
Yes Bank also recently concluded Rs 8,900 crore of capital raise from Carlyle and Advent. However, earnings could remain volatile on a quarterly basis riding on a Security Receipt (SR) of Rs 3,770 crore (from the sale of stressed assets of the face value of Rs 6,800 crore) and ageing on the same, as mentioned in the report. A near-term risk also includes the decision to write down AT-1 bonds, which has been challenged in court and is currently stayed. The supply overhang post expiry of stock is another risk.
According to data sourced from Trendlyne, the average broker target on Yes Bank shares is Rs 19.30, representing a 13% upside from current levels. On the weekly time frame, the price action in the stock shows a pattern of higher highs and higher lows, according to Mumbai-based trader Manish Shah. He added that the long-term trend is up and that the price decline from Rs 24.75 to 17 suggests that the price has seen an intermediate-term corrective decline against an ongoing uptrend.
“The 50-day moving average is trading above its 200-day moving average. The major support zone is between 15.50-16.50. Price action suggests that the narrow range price move between 17.10-16.20 is a basing-out pattern. Accumulate between 15.50-16.50. On the upside, price shows a potential to move higher to 20.50-24.00. Keep a distant stop at 15,” Shah advised.