Shares of YES Bank plunged 13 per cent in Monday’s trade as the three-year lock-in period for the stock ended today. The scrip fell 12.83 per cent to hit a low of Rs 14.40 on BSE. A total of 89.40 lakh shares changed hands on the exchange against a two-week average volume of 302.81 lakh shares.
According to stock market experts, Yes Bank shares are falling due to end of three-year lock-in restrictions on private lenders mentioned above. They said that end of lock-in period would mean high volatility in Yes Bank shares as crores of Yes Bank shares are now open for sale by these private banks. If we add State Bank of India’s (SBI’s) stake with them, then the number of shares that may get offloaded is very high and hence retail investors are worried about big route in Yes Bank share price today. However, stock market experts said that SBI and other banks have taken exposure in Yes Bank on instructions of RBI and hence it won’t be easy for them to book profit and exit at once. However, they maintained that some profit booking can be expected and that is enough to bring high volatility in Yes Bank stocks.
The SBI-led consortium, which has seven private lenders, had infused Rs 10,000 crore in YES Bank in a bid to restore its financial health and help it meet liquidity, capital and other critical parameters. SBI, which was mandated not to reduce its holding below 26 per cent, saw its lock-in period ending last week.
As of the latest shareholding pattern, SBI held 26.14 per cent stake in the private bank. Mortgage lender HDFC owned 3.48 per cent stake ICICI Bank 2.61 per cent; Axis Bank 1.57 per cent stake; Kotak Mahindra Bank 1.32 per cent stake and IDFC First Bank 1 per cent stake in the private lender.
What Should Investors Do Now?
The scrip commands the lowest ‘Buy’ percentage (at mere 7 per cent) among top 100 companies. It is among the least covered stock (14 analysts) in the top 100 pack. Also, ‘Sell’ recommendations (64 per cent) on the stock is among the highest in the largecap pack. In total, the scrip has just one ‘Buy’ call, nine ‘sell’ calls and four ‘Hold’ calls. The consensus target on the stock stands at Rs 17. Despite this, the stock is tracked a lot by retail investors.
On how partial profit booking would mean for retail investors who hold Yes Bank shares, Ravi Singhal, CEO at GCL Broking said, “Even though shareholding of private banks look small in percentage terms, they hold crores of Yes Bank shares. So, even if they off load partially, Yes Bank shares may show high volatility. Thus, Yes Bank shareholders are advised to know their levels and take buying or selling decision on the basis of those levels.”
Asked about the important levels in regard to Yes Bank shares, Ganesh Dongre, Senior Manager — Technical Research at Anand Rathi said, “Yes Bank shares have immediate strong support placed at Rs 15 apiece levels. So, those who have this stock in their portfolio are advised to maintain strict stop loss at Rs 15 and hold the stock in near term. In case this Rs 15 apiece stop loss triggers, Rs 12 to Rs 13 would be a good buying range for fresh buyers as the stock may go up to Rs 20 to Rs 22 levels in short to medium term.”
YES Bank’s decision to writedown AT-1 bonds being challenged in Court is a key risk for the stock going ahead. Besides, the supply overhang due to expiry stays, analysts said.
ICICIdirect said YES Bank has witnessed a gradual improvement in business growth as well as asset quality in lthe ast six quarters. Recently, the bank 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 raised 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,” said ICICIdirect.
Ganesh Dongre of Anand Rathi said that high risk traders can accumulate Yes Bank shares in Rs 15.50 to Rs 16 apiece range as well.
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