The share price of Yes Bank rose about 1.3 per cent in intraday trade today after the private lender said that it would consider a proposal to divide the equity share of the company at a board meeting to be held later this month. The shares opened at Rs 1,503.20 on the BSE and hit an intraday high of Rs 1,512.95, up 1.3 per cent from its yesterday’s close of Rs 1,493.35. The stock had climbed its 52-week high of Rs 1,652.90 on 27 April 2017, while it hit its 52-week low of Rs 1,091.25 on 26 December 2016. At 12:10 p.m. the stock was trading down 0.14 per cent at Rs 1,491.20.
“A meeting of the board of directors of Yes Bank will be held on July 26, 2017, to consider sub-division of equity shares of the bank of the face value of Rs 10 each,” the bank said in a regulatory filing. However, the bank did not provide any further details on the ratio in which the shares will be divided.
Companies generally go for a stock division to improve the liquidity of their shares in the stock market and to make them affordable to the small investors. About 53 companies listed on BSE went for stock splits during the financial year ended March 31, 2017. Among banks, private lender Karur Vysya Bank went for a split of its stock in a ratio of 1:5 to improve liquidity in the market.
Edelweiss Securities in a note said amid asset quality woes, the bank’s progress in branch banking will aid it to achieve best-in-class return ratios, reduce volatility and fuel re-rating.
“At current market price, the stock trades at 2.3 times FY19EP/ adjusted BV, attractive for a bank that has delivered over 30 per cent earnings CAGR in past 5 years and estimated to clock over 30 per cent over FY17-19. Maintain ‘BUY/SO’ with a target price of Rs 1,832,” the brokerage said.