Yes Bank Clarifies on ‘Stake Sale’ Report, Calls it ‘Factually Incorrect’; Stock Up 2.5%

Background

Yes Bank’s share price saw a rise of about 2.5% in Tuesday’s trading session following a clarification by the bank regarding a speculative news report. The report claimed that the Reserve Bank of India (RBI) had granted in-principle approval for the sale of a 51% stake in Yes Bank. The bank labelled these claims as factually incorrect and purely speculative.

Yes Bank Stock History and Performance Over the Last Two Years

Yes Bank, a prominent private sector lender in India, has experienced significant fluctuations in its stock price over the past two years. Here’s a detailed overview of its performance and key events:

2022 Performance Highlights

• January 2022: The stock started the year with modest performance, reflecting market sentiments around its restructuring efforts post the 2020 crisis.
• Mid-2022: The stock saw slight volatility with occasional spikes due to quarterly results and news about strategic initiatives.
• End of 2022: The bank ended the year with a mixed performance. While there were improvements in financial metrics, the stock remained under scrutiny from investors looking for consistent profitability and growth.

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2023 Performance Highlights

• Q1 2023: The stock showed positive momentum, partly driven by the bank’s improving financial health. The standalone net profit for the March quarter more than doubled to ₹452 crore.
• Q2 2023: The stock faced downward pressure amid broader market corrections and sector-specific challenges.
• Q3 2023: Yes Bank’s share price experienced notable gains, driven by favourable quarterly results and positive analyst recommendations. The bank reported a net profit increase of 74% to ₹1,251 crore for the fiscal year 2023-2024.
• Q4 2023: The stock continued to gain traction, buoyed by positive market sentiment and strategic announcements.

Key Events and Their Impact

• Clarification on Stake Sale: Recently, Yes Bank clarified that a news report about a 51% stake sale was factually incorrect. This clarification helped stabilize the stock, which rose by 2.5% following the announcement.
• Financial Results: Consistent reporting of improved financial results, such as the significant rise in net profit and core net interest income, positively impacted the stock.
• Analyst Recommendations: Positive short-term outlooks from analysts contributed to periodic gains in the stock price.

Clarification on Speculative News

Yes Bank issued an exchange filing to address the media report, stating that the RBI had not provided any such approval. The report by CNBC-TV18 suggested that RBI allowed a new promoter to acquire up to 51% of Yes Bank’s shares, beyond the typical 26% limit for promoter holdings in banks.

Market Reaction and Analyst Insights

Following the bank’s clarification, Yes Bank’s stock opened at ₹26.09 on the BSE, reaching an intraday high of ₹26.39 and a low of ₹25.75. Rajesh Bhosale, an equity technical and derivative analyst at Angel One, noted a positive short-term outlook for the stock, projecting potential upsides toward ₹28-30, with ₹25 serving as immediate support.

Financial Performance

For the March quarter of the 2023-2024 fiscal year, Yes Bank reported a more than twofold increase in standalone net profit, reaching ₹452 crore, compared to ₹202.43 crore in the same period last year. The rise was attributed to favourable provisions, write-backs on income taxes, and interest on income tax returns. However, revenue growth was constrained by the bank’s failure to meet priority sector lending requirements.

Yes Bank’s net profit for the fiscal year 2023-2024 saw a 74% increase, reaching ₹1,251 crore. The core net interest income for the March quarter grew by just 2.3% to ₹2,153 crore, with the net interest margin shrinking to 2.4% from 2.8% the previous year.

Upcoming Financial Results

Yes Bank‘s board of directors is scheduled to meet on Saturday, July 20, to review and approve the un-audited standalone and consolidated financial results for the quarter ending June 30, 2024.

News Source: Mint