Shares of YES Bank tanked 13 per cent to hit an eight-month low of Rs 14.40 on the BSE in Monday’s intra-day trade after its lock in period of three years, which was placed under the Reserve Bank of India (RBI’s) reconstruction scheme 2020, ended today.
The stock was quoting at its lowest level since July 2022. It corrected 42 per cent from its 52-week high level of Rs 24.75, touched on December 14, 2022.
‘YES Bank Limited Reconstruction Scheme, 2020’ (“Scheme”) was approved by the Central Government and had come into force on March 13, 2020.
YES Bank on Sunday, March 12, 2023 informed the stock exchange that the shares would get released through the automated system of depositories by Start of Day (SOD) on March 13, 2023 without any further action required from the Bank.
As a part of RBI’s Reconstruction Scheme 2020, State Bank of India (SBI) initially infused capital of Rs 6,050 crore for around 48 per cent stake in YES Bank. Under this scheme, the minimum price was Rs 10 per share and it also contained a lock in period of 3 years till March 2023 for all investors where-in no one can sell old shares in secondary market for 3 years. Additionally, under this scheme, SBI had to hold at least 26 per cent until March 2023.
SBI’s original 48 per cent stake has reduced to around 26 per cent as of December 2022 due to fund raising dilutions over time.
According to analysts at ICICI Securities, YES Bank has witnessed a gradual improvement in business growth as well as asset quality in last 6 quarters. Recently, the bank has concluded sale of stressed assets to JC Flower which has led to substantial reduction in GNPA to 2 per cent.
Going ahead, the bank is poised to pedal higher advance growth (driven by granular retail assets) as it concluded Rs 8,900 crore of capital raise from Carlyle and Advent. Focus on growth along with margin improvement may enable the bank to improve its RoA to guidance of ~0.9-1 per cent in FY25. However, given Security Receipt (SR) of Rs 3,770 crore (from sale of stressed assets of face value of Rs 6,800 crore) and ageing on the same, earnings could remain volatile on quarterly basis, the brokerage said in a recent note.
Near term risk include decision to write-down AT-1 bonds being challenged in court, which is stayed currently and supply overhang post expiry of stock lock-in. The consistent with controlled asset quality holds key for stock, the brokerage said.
At 01:40 pm; YES Bank was quoting 4 per cent lower at Rs 15.83 on an over two-fold jump in its last two-weeks average trading volumes. A combined 520 million equity shares representing 1.8 per cent of total equity of YES Bank had changed hands on the NSE and BSE. In comparison, the S&P BSE Sensex was down 1.2 per cent at 58,448.