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Yes Bank shares fall 13% as brokerages remain bearish on capital raising concerns

Updated : January 14, 2020 03:45 PM IST

Shares of Yes Bank fell 13 percent in intra-day deals on Tuesday as brokerages remained bearish on the stock amid uncertainties over capital raising plans.

Kotak Institutional Equities maintained a 'sell' call on the stock and cut its target to Rs 40 from Rs 55 per share.

Morgan Stanley has also retained an underweight call on the stock with a target at Rs 25 per share.

Shares of Yes Bank fell 13 percent in intra-day deals on Tuesday as brokerages remained bearish on the stock amid prolonged uncertainty over India's fifth largest private lender's plans — rather struggles — to raise capital.

Kotak Institutional Equities maintained a 'sell' call on the stock and cut its target to Rs 40 from Rs 55 a share. Morgan Stanley has retained an underweight call on the stock with a target at Rs 25 a share.

The stock fell as much as 13.1 percent to Rs 36.55 per share on the Bombay Stock Exchange (BSE) in intra-day deals. The stock settled 8.4 percent lower at Rs 38.55 compared with a 0.22 percent, or 93 points, gain in BSE Sensex at 41,952.

Yes Bank said late last year it received offers from Hong Kong's SPGP Holdings and was in talks with other global investors. The bank has been issuing public statements that it was close to a deal to sell stake and raise money.

But a deal has proved to be elusive. Last week, the board said it rejected an offer from a Canadian investor, adding it was scaling down fund-raising plans. To add to the bank's woes, concerns over corporate governance resurfaced after the company's independent director Uttam Prakash Agarwal resigned on Friday.

Agarwal said that there were issues with Yes Bank's fundraising plan. “The management did not disclose the binding bids to the board,” he said.

According to Kotak Institutional Equities, there is no strong visibility of a 15 percent return on equity or 1-1.2 percent return on assets in the medium term. It noted that earnings are likely to be volatile in the medium term and the fundraising delay raises concern on near-to-medium-term prospects.

Morgan Stanley also stated that the uncertainty around the quantum and pricing of capital raising continues. The elevated asset quality stress will weigh on the stock price, it added.

The stock fell as much as 8 percent yesterday after the board said that it will not proceed with the $1.2 billion offer by Canada-based Erwin Braich. The private lender has also scaled down its total fundraising plan to Rs 10,000 crore from Rs 14,000 crore earlier. London-based Citax which had offered to invest half a billion dollars is still in the fray and a final decision will be taken in the next board meet.

“The relevant conditions precedent could not be completed as on date. Hence, Citax offer will be taken up during the next round,” Yes Bank said in a statement.

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Yes Bank shares fall 13% as brokerages remain bearish on capital raising concerns

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