Yes Bank shares tumble after Q1FY20 results; should you buy, sell or hold?

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Updated: July 18, 2019 11:19:50 AM

Shares of private lender Yes Bank fell significantly on Thursday after it reported dismal results for Apr-Jun of FY20. Yes Bank’s shares slumped nearly 15 per cent in the early trade to Rs 83.70 per share.

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Shares of private lender Yes Bank fell significantly on Thursday after it reported dismal results for Apr-Jun of FY20. Yes Bank’s shares slumped nearly 15 per cent in the early trade to Rs 83.70 per share. Currently, its shares are trading 10 per cent lower at Rs 88.30 per share from the last close. Sameer Kalra, Founder and Research head of Target Investing is still holding a long term positive outlook on the stock and has recommended HOLD on the stock. The results show that there is some more pressure in books and the bank may see further rating downgrades in its loan book. 

“Results show that there is some more pressure in books and would for further rating changes in loan book. The most important event due is capital raising will look for that announcement to increase the weight. We still hold our long term positive outlook for the bank,” Sameer Kalra told Financial Express Online. 

 Given the steep drop in the share price of Yes Bank, Yuvraj Choudhary, Research Analyst with Anand Rathi Shares & Stock Brokers said he sees limited downside from the current levels and has recommended SELL on the stock. 

A heavy MTM (mark-to-market)  provision on its investments in two large financial service players resulted in profit coming in at Rs1.14 billion. More importantly, CASA (current and savings account ratio) deposits declined quarter-on-quarter, which is a concern in addition to the continued delay in capital raising, now guided to be a Q2 event, ICICI Securities said. “As we factor-in a 50% probability of this capital raising, we lower our target price by 45% to Rs108, implying a target P/ABV multiple of ~1x and upgrade the stock to ADD (from Sell),” ICICI Securities added.

Yes Bank reported a net profit of Rs 113.8 crore in Apr-Jun June, down 91% from the net profit of same quarter last year as provisions shot up 185% year-on-year (y-o-y) to Rs 1,784 crore. Net interest income (NII) surged 2.8%  y-o-y to Rs 2,281 crore. Net interest margin (NIM) fell 20 basis points (bps) sequentially to 2.8%. Pre-provisioning operating profit fell 28% y-o-y to Rs 1,959 crore. Asset quality at the bank deteriorated from the previous quarter, with the gross non-performing asset (NPA) ratio rising 179 bps to 5.01% and the net NPA ratio inching up 105 bps to 2.91%.

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