YES Bank, was among the biggest gainers since it listed in July 2005, lost 67 percent of its value since April 2018. The stock gave over 2800 percent returns to investors since listing till April 2018.
YES Bank was among the biggest gainers till April 2018 and had given over 2800 percent return since listing in July 2005. From 2009 to April 2018, return on Yes Bank shares had been over 1400 percent. However, things changed after April 2018 and the stock has lost 67 percent of its value.
The stock which was around Rs 21 in 2009 (Rs 11.74 on the listing day), was trading around Rs 350 per share in April 2018. It is currently trading at Rs 103.
In 2019 alone, the stock had fallen 40 percent as compared to a 9 percent gain in Sensex. The fall started after concerns emerged regarding eroding balance sheet strength, rising non-performing assets (NPAs), capital raising and weak visibility of profits.
The trouble started in April 2018, when RBI had in a letter to the lender said it had found a number of 'serious lapses in the functioning and governance of the bank'. The regulator had also flagged these issues to the then chairman Ashok Chawla, and had said that the corrective actions initiated at the bank were 'post-facto'.
Then in September, Reserve Bank of India rejected the proposal to have the sixth three-year term for Rana Kapoor as CEO and MD of the bank. Kapoor had sought a three-year extension till 31 August 2021, but the regulator agreed to extend his term only till 31 January 2019. The RBI directed the bank to appoint Kapoor's successor by 1 February 2019.
Following RBI's action, the stock, which was used to be a top pick of many brokerages, had taken a massive beating. Brokerage firms including Goldman Sachs Group, Nomura Research, Citigroup and IDFC Securities downgraded the stock and slashed their target prices. Just in the two trading sessions post the RBI move, the stock tanked over 40 percent. Ravneet Gill took charge of the bank on March 1, 2019
Then, in the December-quarter, the private sector lender reported a 7 percent fall in its net profit at Rs 1,001 crore against a profit of Rs 1,076.8 crore in the same quarter in the previous fiscal.
The downfall accelerated after it reported its first-ever net loss of Rs 1,506 crore for the March 2019 quarter on the back of the provisions soaring over nine times. It had posted a profit of Rs 1,179 crore in the year-ago period. The bank classified about Rs 10,000 crore of its exposures, representing 4.1 percent of its total loans, under its stressed assets watch list.
Analysts attribute the bank's exposure worth Rs 13,000 crore to Anil Ambani’s Reliance group entities for the recent downfall.
Post the Q4 results, YES Bank recorded its sharpest single-day fall since listing, diving 30 percent. Investors lost Rs 16,316 crore in market capitalisation on that day. Since reporting its March quarter results on April 26, 2019, the stock has fallen over 55 percent till date.
Following the Q4 results, another slew of downgrades started for the private lender on concerns over the further deterioration in asset quality. While, Moody’s warned of a potential downgrade on its credit rating, citing its 'sizeable exposure' to weaker companies in the shadow banking sector. Morgan Stanley cut its target price to Rs 95 per share, remaining 'underweight' on the stock.
UBS also slashed its price target on concerns over its relatively high exposure to lower-rated companies. Whereas, Credit Suisse said in April that the bank was among lenders most-exposed to a few large companies with stressed debt.
Recently, two members had resigned from the board, causing further concerns among investors. It was reported that the bank's recent exits came after former CEO and founder Rana Kapoor requested for a position back on the lender's board. However, Kapoor denied that he sought for a comeback on the board.
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First Published: IST