YES Bank share price hit upper circuit of 5% for the second consecutive session on Wednesday after CARE Ratings upgraded ratings on its various debt instruments following improvement in bank's credit profile after the reconstruction plan. Sentiment around the stock was also upbeat after it was included in MSCI Index from the end of November.
The rating agency has revised the bank's infrastructure bonds rating to 'CARE BBB' from previous 'CARE B' and removed the bonds from 'under credit watch' with developing implications, while the outlook is stable.
Likewise, Rs 8,900 crore tier-II bonds and Rs 2,231 crore lower tier-II bonds are upgraded to BBB ratings with a stable outlook, Yes Bank said citing a release from CARE.
Also, the brokerage gave 'CARE BB+' rating each on YES Bank's Upper Tier II Bonds and Perpetual Bonds (Basel II) from previous 'CARE D'.
In another update, shares of private lender rose on reports of inclusion in November 2020 semi-annual index for the MSCI Equity Indexes. The list also includes ACC, Adani Green Energy, Apollo Hospitals Enterprises, Balkrishna Industries, Ipca Laboratories, Kotak Mahindra Bank, Larsen & Toubro Infotech, MRF, Muthoot Finance, PI Industries and Trent.
YES Bank share price opened at Rs 14.21 today, also the day's high, rising 4.95% in today's session against the earlier close of Rs 13.54 on BSE. The stock also touched a low of Rs 14.15 today.
The stock has risen 16% in the last 5 sessions of consecutive gains. There were only buyers and no sellers for the stock. Stock price of YES Bank has risen 3.12% in one month. However, the share has declined 71% since the beginning of the year.
YES Bank stock is trading higher than 5, 20 and 50-day moving averages but lower than 100 and 200-day moving averages. Market capitalisation of the lender stood at Rs 35,603 crore.
The stock has risen 8% in one month. However, the share has erased 69% value since the beginning of the year. Shares of the private lender quoted a 52-week high price of Rs 87.95 and a 52-week low of Rs 5.55.
"The revision in the ratings assigned to the debt instruments of Yes Bank Limited factors in the improvement in the credit profile of the bank post the implementation of the reconstruction scheme announced by the Reserve Bank of India and approved by Government of India from March 2020," CARE said.
In its note, CARE Ratings added, "The reconstruction scheme for YBL has brought about strong systemic support to the bank by various market participants including GOI, RBI and SBI acting in order to protect the depositors' money by way of providing capital support, liquidity support and reconstitution of the board of directors for better governance."
"The ratings also factor in the improvement in the bank's capitalisation levels post the follow on public offer (FPO) of equity shares by which the bank raised additional equity capital of Rs 15,000 crore in July 2020, and bank's return to profitability in H1FY21. The ratings also factor in the improvement in bank's liquidity profile, majorly on account of stabilization in its deposits which also enabled the bank to repay the SLF in September 2020 prior to the due date. The ability of the bank to grow its scale through the build-up of granular advances and broad-based deposit mobilization would be a key monitorable," it added.
CARE ratings acknowledged that the lender has been taking measures to improve its operating profitability by improving its non-interest income and control its operating cost. Bank's cumulative Covid-19 related provision amounted to Rs 1,918 crore as on September 30, 2020.
Meanwhile, most analysts have 'sell' ratings on the scrip trading in single digits this year. Kotak Institutional Equities has a sell rating on the stock at a price of Rs 13, with fair value at Rs 11, with a downside of 15%.
Last week, the share of private sector lender was on a decline since the bank reported its June-Sept quarter earnings. The lender posted a net profit of Rs 129.37 crore for the September quarter compared with Rs 600.08-crore loss posted in the corresponding period last year.