YES Bank falls 13% in three days; hits over 3-year low on BSE

Shares of YES Bank were trading lower for the third straight session in the afternoon trade on Monday. The stock was down 5 per cent at Rs 133 per share, on concerns of eroding balance sheet strength, rising non-performing assets (NPAs), capital raising concerns and weak visibility of profits.

YES Bank shares, which hit a three-year low on the BSE, was trading at its lowest level since February 29, 2016. In the past three trading sessions, it has fallen 12 per cent as compared to a 1 per cent decline in the S&P BSE Sensex. On the NSE, however, YES Bank hit a 52-week low of Rs 132 on May 17, 2019.

Since April 26, 2019, the share price of YES Bank has slipped 44 per cent from Rs 237 apiece to little over Rs 100, after the bank had posted its first ever net loss of Rs 1,506 crore for the March 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.

Analyats attribute the bank's exposure worth Rs 13,000 crore to Anil Ambani’s Reliance group entities for the recent downfall.

In the past three sessions, shares of Reliance group companies have been under selling pressure, falling up to 34 per cent. While Reliance Power posted a net loss of Rs 3,558 crore in March quarter, the company has booked impairment and write-offs worth Rs 4,170 crore during Q4FY19.

Analysts at LKP Securities downgraded the rating on YES Bank from ‘buy’ to ‘sell’ with a revised target price of Rs 124 per share as the brokerage firm believes the bank’s profits will drop over the next two years due to higher slippages and provisioning.

“Exposure to some of the vulnerable names could take a toll on the bank’s numbers. In our estimation, credit cost could be as high as 1.5/1.8 per cent in FY20e/FY21e. Although NPA marking has been done in few big accounts like IL&FS, Jet Airways (forming 1.3 per cent of the loans), provisioning on the same is hardly 25-30 per cent, implying higher provisioning requirement in FY20,” the brokerage firm said.

It further added that the bank’s exposure worth US $1.85 billion (according to media reports) to Reliance ADAG group looks sizeable and equivalent to 50 per cent of its networth.

"Large part of this exposure could be to the NBFCs. Loans to Reliance Communications is still standard in the books of the bank and as per company filings, dues are pending to YES Bank from FY18 onwards,” it added.

Analysts at Reliance Securities believe that higher credit costs, revised growth assumptions and lower fee income could have a bearing on the bank’s medium-term earnings and valuations, despite they being positive for sustainability of earnings over the longer term.

At 01:01 PM, YES Bank was down 4.4 per cent at Rs 133.80 on the BSE, against 0.17 per cent decline in the S&P BSE Sensex. A combined 61.5 million shares have changed hands on the counter on the BSE and NSE so far.