Shares of Yes Bank tumbled nearly 8 per cent in intra-day trade to hit 52-week low of Rs 107.10 on the Bombay Stock Exchange on Tuesday after global brokerage firm UBS maintained 'sell' rating on the stock and also cut the target price to Rs 90 from Rs 170. The stock has fallen 20 per cent in the last five trading sessions after UBS India lowered its target price by over 47 per cent, citing weak earnings going ahead.
The agency expects 255/200 basis points credit cost in fiscal 2020-21, higher than the bank management's guidance of 125 basis points.
"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," the UBS said in its report.
Weighed down by the development, Yes Bank share price declined as much as 16.90 per cent to hit an intra-day low of Rs 107.10. Paring most of the losses, the scrip closed trade at Rs 109.30, down 5.94 per cent. It was the worst hit among front-line stocks on the BSE. The stock also saw spurt in volume trade with 85.98 lakh shares that changed hands over the counter as compared to two-week average of 69 lakh shares on the BSE.
In a similar fashion, stocks of Yes Bank ended 5.94 per cent lower at Rs 109.25 on the National Stock Exchange. The scrip hit a 52-week low of Rs 107.10 during the day's trade after opening flat at Rs 116.
Last week, 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.
Adding to the woes, Yes Bank's fundraising plans may get delayed as private equity (PE) investors Blackstone Group, Apax Partners and Warburg Pincus seek more details of the lender's exposure to stressed loan accounts before committing to an equity infusion, according to a report by Livemint.
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.
Edited by Chitranjan Kumar