YES Bank's AT1 bonds writeoff: Rs 11,000-crore hit for shareholders, Kotak says lender may need to raise capital 

YES Bank share price: YES Bank Ltd's Rs 8,400-crore AT-1 write-off could create a potential liability of Rs 13,000- Rs 15000 crore, including accrued interest, with a meaningful impact on capital ratios and net worth, says Kotak Institutional Equities.

"Based on our estimates, CET-1 could decline by 450 bps to 9.3% from current levels of 14%, increasing the likelihood of a capital raise," it added. There would be a 25-30% impact on FY2026 net worth.

The brokerage maintained its 'sell' call on the bank and said it would revisit its Fair Value after management commentary and earnings. It expects a total impact of 450 bps on the bank’s capital adequacy ratio.

On Thursday, YES Bank stock closed 14.43% lower amid reports that the Supreme Court has set aside YES Bank's Rs 8415 crore Additional Tier-1 (AT1) bonds write-off decision. YES Bank stock slipped 20% intra day to Rs 16.98 against the previous close of Rs 21.21.

In the current session too, the banking stock fell 3% to Rs 17.55. Market cap of the lender fell to Rs 55,652 crore. YES Bank shareholders have lost nearly Rs 11,260 crore in market capitalisation from October 14 close. On Wednesday, market cap of the bank  stood at Rs 66,159 crore.

"The outcome is negative to the capital structure of Yes Bank. We do not know if there are any legal options left to proceed on this issue from the bank’s perspective. If this is accepted, assuming the entire principal and interest of Rs 15000 crore is marked down from equity (through reserves or otherwise), we expect a total impact of 450 bps on the bank’s capital adequacy ratio, with the CET-1 ratio dropping to 9.3% from current levels of 14%. There would be 25-30% impact on FY2026 net worth," said the brokerage.

"We maintain SELL on YES Bank with a FV of Rs19, valuing the bank at ~1X book and ~10X FY2028E EPS for RoEs that are still 10% (prior to any markdown). We will revisit our FV and rating post results tomorrow," added the brokerage.