YES Bank declines for second straight day, slips 17% on heavy volumes

The bank on Friday fixed floor price for its FPO at Rs 12 per share and a cap of Rs 13 per unit

Shares of YES Bank extended their decline itnto second straight day, down 17 per cent to Rs 21.20 in the intra-day trade, on the BSE on Monday on the back of heavy volumes after the bank on Friday fixed floor price for its proposed follow-on public offer (FPO) at Rs 12 per share and a cap of Rs 13 per unit. In the past two trading days, the stock has tanked 20 per cent from a level of Rs 26.65 on the BSE.

At 10:15 am, YES Bank was trading 11 per cent lower at Rs 22.75 on the BSE, as against 0.79 per cent rise in the S&P BSE Sensex. A combined 32 million equity shares had changed hands on the counter on the NSE and BSE till the time of writing of this report.

The fundraising is important for the bank to boost its capital base, especially after it announced last month that it has failed to make interest payments on its bonds, after the RBI said its capital adequacy ratio was below regulatory ratio.

On a reported book value basis, YES Bank’s FPO is priced below its FY20 book value and the 50 per cent discount to current market price seems to partly capture the future pain. However, on adjusted book value basis (book value minus net NPAs), the FPO is priced at above 1x, analysts say.

According to a Business Standard report, though the discount suggests that there could some short-term gains, valuations are not significantly attractive. Also, YES Bank’s asset quality concern, which could aggravate due to Covid-19-led economic disruptions, offer little comfort, say analysts.  CLICK HERE TO READ FULL REPORT

Meanwhile, the market regulator Securities and Exchange Board of India (Sebi) may look into a large amount of share transaction of YES Bank under the Securities Lending and Borrowing Mechanism (SLBM) on July 9, Moneycontrol reported quoting sources. These transactions took place a day prior to the announcement of the bank’s floor price for its FPO.