Analysts remain cautious; say much would depend on long-term strategy
Shares of private sector lender YES Bank ended over 13 per cent higher on the BSE amidst talk of a stake-sale by Rana Kapoor and the bank infusing more capital.
The bank’s scrip ended 13.47 per cent higher at ₹71.6 apiece on the BSE on Wednesday.
YES Bank’s co-founder and promoter Rana Kapoor is understood to have initiated discussions with Paytm founder Vijay Shekhar Sharma, and CEO of One97, to sell his stake.
Separately, the lender is also understood to be close to finalising deals to shore up its capital.
Last month, it raised ₹1,930 crore through a qualified institutional placement. On August 30, the bank’s board also cleared a proposal to “raise growth capital” by increasing the authorised share capital.
In a regulatory filing late on Tuesday night, YES Bank had said that it in “the usual and ordinary course of its business continues to explore various means of raising capital and funds through issuance of securities to diverse set of investors, in order to meet its business and regulatory requirements, subject to compliance with prescribed procedures and receipt of statutory regulatory approvals.”
Analysts however, remain cautious and said that much would depend on its strategy going ahead.
“We view the entry of a strong stakeholder as sentimentally positive as it would hopefully add to the overall bandwidth, strategy and corporate governance of YES Bank. However, much would depend on the implementation and success of the bank’s new strategy in the long-term, and credit cost movement in the medium-term,” said Lalitabh Shrivastawa, AVP — Research, Sharekhan by BNP Paribas. YES Bank posted a net profit on standalone basis of ₹113.76 crore for the quarter ended June 30, after a net loss of ₹1,506 crore in the March 2019 quarter. Its asset quality continues to be a cause of concern.
Global rating agency Moody’s Investors Service had late last month downgraded YES Bank’s ratings and said the outlook is negative, wherever applicable. It had said it expects the bulk of the bank’s operating profits to get consumed by loan loss provisions over the next 12 to 18 months, and will not support internal capital generation.