The stock has fallen 65 per cent since the announcement of March quarter (Q4FY19) results on April 26, when the bank had posted its first-ever quarterly loss in January-March quarter of FY19 at Rs 1,507 crore. In comparison, the benchmark S&P BSE Sensex was up marginally by 0.30 per cent during the same period.
Analysts at BOB Capital Markets
recommended ‘sell’ rating on YES Bank
with revised March 2020 target price of Rs 90 from Rs 210 earlier.
“We scale back our FY20/FY21 earnings estimates by 70 per cent/40 per cent to factor in slower loan growth, higher slippages and a rise in credit costs, while cutting our target P/ABV multiple to 1.2x FY21E (from 1.7x earlier). Despite the stock trading at low valuations of 0.9x FY21E P/BV, we remain sellers as we await clarity on stabilisation of the ‘BB & below’ rated pool, adherence to credit cost guidance, and capital raising,” the brokerage firm said in result review.
Analysts at Antique Broking said the bank has excluded investment related provisions of Rs 1,100 crore (20-30 per cent provided) on two NBFCs even as it maintained its credit cost guidance of 125bps for FY20. "Hence, with sharp increase in stress pool and exclusion of investment related provisions, comfort on guidance remains low,” they said.
With common equity tier or CET 1 of 8 per cent, equity infusion at current stage becomes important and would provide room for absorption of credit risk. Thus, bank's performance becomes highly contingent to resolution of some of these large exposures to promoter group entities/corporate deleveraging and capital support. Therefore, despite significant correction in the stock price and low valuation of 0.8x FY20BV we believe uncertainties are high and put our rating Under Review, it said.
At 09:32 am, YES Bank was trading 11 per cent lower at Rs 87 on the BSE. A combined 64 million shares have changed hands on the counter on the NSE and BSE so far.