Shares of YES Bank have climbed 28 per cent in five trading sessions. According to stock market experts, Yes Bank share price rally can be attributed to three major news — private equity (PE) group Carlyle considering to acquire 10 per cent stake in Yes Bank, Kotak Mahindra Bank board’s approval to pump ₹500 crore in Yes Bank and recent rating upgrade by CARE rating agency to its debt instruments from BBB to BBB+. They said that Yes Bank shares have given fresh breakout at Rs 15 and currently this private lender stock looking in ‘uptrend’ on chart pattern.
However, Analysts have mixed views on the bank’s profitability, even as they see a spike in net interest income (NIM) in the March quarter due to a favourable base effect. Net interest margin (NIM) may improve sequentially, analysts said.
ICICI Securities said improved collection trends, reduction in overdue pool and better recoveries and upgrades should support gradual decline in gross non-performing assets. For the quarter, it sees gross NPAs at 14.7 per cent, the same as the previous quarter.
It sees profit for the quarter at Rs 170 crore compared with a profit of Rs 266.40 crore and Rs 3,787.70 crore in the year ago quarter. NII is seen growing 70 per cent at Rs 1,680 crore compared with Rs 986.70 crore in the same quarter last year.
Emkay Global expects the bank to report Q4 loss of Rs 12,00 crore. “Slower growth, soft margins and elevated higher credit cost could drive the bank to deep losses. Slippages remain elevated,” it felt.
According to stock market experts, Yes Bank share price rally can be attributed to three major news — private equity (PE) group Carlyle considering to acquire 10 per cent stake in Yes Bank, Kotak Mahindra Bank board’s approval to pump ₹500 crore in Yes Bank and recent rating upgrade by CARE rating agency to its debt instruments from BBB to BBB+. They said that Yes Bank shares have given fresh breakout at Rs 15 and currently this private lender stock looking in ‘uptrend’ on chart pattern.
Speaking on the reason for rise in Yes Bank share price; Ravi Singhal, Vice Chairman at GCL Securities said, “Yes Bank share price today is surging on the news that PE group Carlyle is mulling to buy 10 per cent stake in the private lender by investing to the tune of $500 to $600 million. Dalal Street is buzzing with this news and today’s rise in the stock can be attributed to this news only. market is looking at this stock a good signal from investors as we saw Kotak Mahindra Bank board approving Rs 500 crore investment in private lender. So, these two developments from the investment front are working as major catalyst for Yes Bank share price rally.”
Hinting at rumours in regard to merger and acquisition related news fueling Yes Bank shares; Santosh Meena, Head of Research at Swastika Investmart Ltd said, “Yes Bank is surging sharply for the last few days as there are rumors of its acquisition by a big player. We are seeing multiple mergers and acquisitions in the BFSI industry, therefore, such kind of buzz for Yes bank can’t be ruled out. Actually, the banking sector is looking in a very good stage for multiyear growth after a long period of pain where we can expect a decent performance by small banks like Yes Bank in future or we can say that worst is behind us of this company, therefore, some investors are looking it as a bargain buying.”
Sharing important levels on the technical chart pattern, Santosh Meena said, “Technically, Yes Bank share has broken out a key hurdle of Rs 15 that may lead to further bullish momentum in this counter towards Rs 17 to Rs 20 levels. On the downside, Rs 15 should act as an immediate and strong support level while Rs 13 will be a key support level.”
On how rating upgrade has pushed Yes Bank share price rally; Sonam Srivastava, Founder at Wright Research said, “The shares of Yes Bank have jumped up over 20 per cent in a week after the rating agency CARE has upgraded their debt instruments to BBB+ from BBB. The agency said that the bank’s continued demonstration of stabilization of operations and growth in business and continued improvement in profitability with stable asset quality parameters amidst concerns over Covid-19 related stress has led to this upgrade. However, the bank still has a great proportion of stressed advances that need to monitor.”
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