Shares of Yes Bank fell nearly 13% in intra-day trade on Monday as the three-year lock-in period for several key investors came to an end. The stock closed 4.9% lower at Rs 15.70 on the National Stock Exchange, after it hit an eight-month low of Rs 14.40 earlier in the day. The stock closed down 5.3% at Rs 15.65 on the BSE.
Yes Bank was the most-traded stock on the NSE as 56.05 crore shares changed hands. It was the second most-traded stock on the BSE.
In March 2020, a consortium led by State Bank of India
The bank’s rescue plan imposed a three-year lock-in on existing shareholders, except for the ones holding less than 100 shares, for up to 75% of their shareholding. This forbade various private banks from offloading their shares till the expiry of the lock-in period. As the lock-in expired on Monday, there was a selloff in the bank’s stock. Earlier, media reports had said private banks would gradually offload their stake in Yes Bank.
Apart from SBI, Housing Development Finance Corporation, ICICI Bank
“A lot of incremental selling is not coming through. Out of all the people that are locked in, only ETFs have sold, and they have to mandatorily sell. Some of the investor banks are still locked in and you do not know how they are thinking. The selling pressure will be gradual. While Yes Bank is cheap, you should stay away as far as the stock-selection point of view is concerned. There are much better opportunities in the broader banking space,” a fund manager said.
The bank has witnessed an improvement in the asset quality and business growth in recent quarters. Its balance sheet grew nearly 13% year-on-year (y-o-y) to Rs 3.4 trillion as on December 31. Total deposits grew nearly 16% and total advances rose 10%. The gross non-performing asset ratio fell to a four-year low of 2% as on December 31 from 12.9% a year ago.
The net interest margin improved by 10 bps YoY to 2.5% in October-December, still lower than several private sector banks.
Despite the improvement in the asset quality, analysts say the would have to sharply improve its net interest margin to deliver a better return for investors. “I would avoid Yes Bank. I think there are better banks that have corrected. I would rather look at those banks. They have reported just one quarter of profit after they went into trouble. Even now, the bank’s gross non-performing asset ratio is very high. I think the upside in the stock is limited from current levels,” Prabhakar AK, head of research, IDBI Capital, said.