YES Bank shares plunge 12% on Bombay HC order, poor Q3 results. Full details, analyst views & more

Shares of YES Bank plunged 12 per cent in Monday's trade after the Bombay High Court quashed the YES Bank administrator's March 2020 decision to write-off of additional Tier-1 (AT1) bonds. An 80 per cent drop in December quarter profit due to higher provisioning added to 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 has strong legal grounds to appeal against the court, investors were cautious.

"The management indicated that the bank is in process to appeal in Supreme Court against the recent High court order that quashed the write-off of additional tier 1 bonds (AT 1) issued by the bank. We put the bank 'under review' as we seek further understanding on provisioning implications of security receipts which may impact profitability is going forward," Nirmal Bang Institutional Equities said in a note.

Kotak Institutional Equities said YES Bank's 80 per cent YoY decline in earnings was largely due to higher provisions.

"The bank completed the sale of bad loans to the ARC resulting in significant reduction in headline NPL ratios and also raised capital for growth. We shift focus towards growth and normalization of RoEs. The recovery to normalcy appears to be a few years away with negligible credit costs being the only key lever," it said while maintaining sell on the stock with a fair value of Rs 17 from Rs 16 earlier.

Following the development, the scrip fell 12.37 per cent to hit a low of Rs 17.35 on BSE.

Yes Bank's consolidated December quarter profit came in at Rs 55.07 crore, as provisions on legacy bad assets made it set aside higher amounts as provisions.  It reported an 11.7 per cent jump in the core net interest income at Rs 1,971 crore on the back of a 10 per cent advances growth and a 0.10 per cent expansion in the net interest margin at 2.5 per cent.

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