Yes Bank was in news last week after the company deferred its plans to raise $1 billion over misinterpretation of new Qualified institutional placement (QIP) guidelines. As a result the company’s shares ended with loss of 4.01 per cent per cent on Friday at Rs 1,277.25. The scrip of the bank ended 5.63 per cent down at Rs 1205.35. It opened at Rs 1254.35 and has touched a high and low of Rs 1254.95 and Rs 1198.05, respectively.
In the last four days till September 12, 2016, share price of the company has fallen 16.35 per cent and has eroded market cap of Rs 9,924.79.
In a BSE filing on September 8, 2016, the company said, “Due to extreme volatility during today’s trading day because of misinterpretation of new QIP guidelines, Yes Bank has been advised by its appointed merchant bankers to defer its proposed QIP.”
However, Bank of America Merrill Lynch (BofAML) has maintained the ‘Buy’ rating on the stock with target price of Rs 1,590 as it believes the private lender is fundamentally strong, with operating levers in place.
It said,” Despite the recent deferment of capital raise, we believe, fundamentally, nothing has changed. The bank has been working for some time now on retailising the model. To that end, we believe it has achieved a
fair amount of success, with rising granularity of balance sheet. Asset quality continues to remain comfortable with sufficient buffers in place. Despite the bank having relatively smaller retail mix, its return of assets (RoA) is comparable with private peers.”
The brokerage house added that softening wholesale rates, better traction in retail deposits and reduction in saving rates could continue to drive up margins gradually.
Yes Bank managing director and chief executive officer Rana Kapoor had earlier in June said the bank will raise $1 billion from overseas investors in the current fiscal.