YES Bank share price close higher in trade today amid reports that private equity (PE) firms expressed interest for a majority stake in the private sector lender. YES Bank share price closed 11.48% or 10.70 points higher at 103.90 level compared to the previous close of 93.20 on BSE. YES Bank share price ended above 100 level after nine consecutive sessions.
The large cap stock touched an intraday high of Rs 106.30 (14.06%) on BSE today. YES Bank share price has lost 72.59% during the last one year and fallen 42.83% since the beginning of this year.
11 of 41 brokerages rate the stock "buy" or 'outperform', 12 "hold" , seven "underperform" and 11 "sell", according to analysts' recommendations tracked by Reuters.
"US-based private equity investor made an offer to acquire worth $850 million stake in the bank, the term sheet offer for which was made over the weekend," The Economic Times said in a report.
"There are three more PE players in the consortium, two US-based and two domestic. The consortium leader may pick a 10 percent stake in the bank, while the rest may together pick another 10 percent," the report added.
The surge in YES Bank share price is also significant as the bank is set to announce its Q1 earnings tomorrow.
During January-March quarter, YES Bank reported a net loss of Rs 1,506.64 crore as against a net profit of Rs 1,179.44 crore during the year ago period, due to rise in provisioning for bad loans.
On the asset quality front, gross non-performing assets (NPAs) of the bank doubled to 3.22 per cent of the gross advances as on March 31, 2019, from 1.28 per cent at the end of 2017-18.
YES Bank share price has been hit by a series of negative developments affecting the lender.
In June, global rating agency Moody's Investors Service placed YES Bank's foreign currency issuer rating of Ba1 under review for downgrade, citing the private lender's sizeable exposure to finance companies.
According to the agency, the ongoing liquidity pressures on Indian finance companies will negatively impact the credit profile of YES Bank, given the bank's sizeable exposure to weaker companies in the sector.
The stock also came under pressure after UBS maintained 'sell' rating on the stock and also cut the target price to Rs 90 from Rs 170.
"We estimate revenue growth will be below 10 per cent in next two years as the business model shifts away from a high upfront fee business. We expect fee income to decelerate and margins to narrow sharply in FY20-21. Higher NPL formation and a shift towards low-yield business are likely to impact fee/margins adversely," UBS said in its report.
Edited by Aseem Thapliyal