YES Bank share price tanked in early trade today after the private sector lender reported a surprise loss of Rs 1,506-crore net loss for the March quarter as against a profit of Rs 1,179 crore in the year-ago period as provisions soared over nine-times. A series of downgrades by brokerages citing weak Q4 performance of the bank also led to negative sentiments around the stock.
YES Bank share price fell up to 30% to Rs 167 compared to its previous close of 237.40 on BSE.
YES Bank share price opened 9.98% lower at 213 level on the BSE. Its market capitalisation fell to Rs 38,909 crore on BSE. The stock logged turnover of Rs 107.55 crore with 60.23 lakh shares changing hands on BSE. YES Bank stock has lost 24.69% during the last three trading sessions. On NSE, YES Bank stock was trading 25% lower at 178 level compared to the previous close of 237.20.
YES Bank share price closed 29.23% or 69.40 points lower on BSE. On NSE, the stock fell 29.70% or 70 points to 166.75 level. The stock was the top Sensex, Nifty loser in trade today.
YES Bank has fallen 50% during the last one year and lost 2.09% since the beginning of this year.
Manish Yadav, Head of Research at CapitalAim said, "After steep fall of stock to 165 level, we would advise short term traders to avoid buying at current levels and look for buying opportunity only around 130 levels for a bounce back. Any pullback rally must be used to offload the stock. Considering the pressure on net interest margin and poor asset quality and loan book, medium term prospects of the company looks weak. The bank also has exposure to ADAG companies which have been recently downgraded. Long term investors should stay away from this stock at current levels as the results may remain weak for a couple of quarters."
Brokerage Macquarie announced a double-downgrade of the Yes Bank stock to 'underperform' and also massively slashed the stock price a low Rs 165 over the next 12 months, as against Friday's close of Rs 237.40.
Australian brokerage Macquarie has admitted to overlooking the risks from the structured finance business of Yes Bank and has downgraded the stock by a full two notches.
The bank reporting a three-times increase in BB-rated and below accounts despite a higher slippage of Rs 3,408 crore in the quarter is a negative surprise, the brokerage said, adding the sharp decline in fee income due to changes in accounting practices is also a concern.
Moreover, the new chief executive Ravneet Gill's revelation that only 30 percent of its 1,100-odd branches are profitable further dampens the fundamental view on the bank, the brokerage said.
Brokerage HSBC too downgraded the YES Bank stock and gave a reduce call on the stock with a revised target price of Rs 164 from Rs 243. It cut FY20/21 estimated profit after tax by 70%/56% for the lender. This is the first quarterly loss since FY06 as asset quality deteriorated significantly.
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Kotak Institutional Equities gave a sell call on the stock with a target price of Rs 170 from earlier Rs 210. The bank reported loss led by high provisions (9 times yoy) and 38% yoy decline in operating profits. New business strategy, similar to other private banks, has begun. High credit costs, weak return on equities, low CET-1 (8.5%) would make transition painful, the brokerage said.
Credit Suisse said has given a neutral rating on the lender with a target price of Rs 205. CS cut earnings per share by 50%. Clean up has commenced in 4Q19.
With board now capping dilution to 10%, given provisioning needs and 110 bps needed to get to management. Threshold of 9.5% (CET-1 at 8.4%), bank will be constrained for growth capital.
On Friday, the bank reported its earnings for the quarter ended March 2019. Higher provisions for possible reverses, including a massive Rs 2,100-crore contingency reserve, were the prime reason for the massive loss, the bank said. The heavy quarterly loss crimped the full year profit at Rs 1,720 crore as against Rs 4,224 crore in FY18.
Had it not been for a Rs 831-crore write-back, the private sector lender would have reported higher losses for the quarter. An almost 10-times spike in provisions to Rs 3,661 crore from Rs 399 crore in the year-ago period led to the massive hit on the bottomline.
This includes a contingent provision of Rs 2,100 crore. Leadership changes have often led to massive clean-ups at banks, and the practice, normally at state-run banks, has been adopted by the new Managing Director and Chief Executive Ravneet Gill.
Overall slippages stood at Rs 3,481 crore and included Rs 552 crore exposure to Jet Airways. The bank has outstanding loan of Rs 2,528 crore to various companies and SPVs of IL&FS Group. Of this, Rs 2,442.05 crore has been classified as NPA with specific provision of Rs 610.51 crore (25 per cent).
The gross non-performing assets ratio more than doubled to 3.22 per cent from 1.28 per cent in the year-ago period and 2.10 per cent in the preceding quarter. It has a 7 per cent exposure to the commercial real estate sector, which is facing troubles.
The bank, which closed FY19 with credit costs of 2.19 per cent due to the additional provisioning, is targeting to get the same down to 1.25 per cent in FY20.
In a separate filing, Yes Bank said its board has approved raising funds up to Rs 20,000 crore, in Indian or foreign currency, by issue of debt securities.
Edited by Aseem Thapliyal