YES Bank hits over 5-year low; down 38% in one month

The stock dipped 4% to Rs 95, its lowest level since May 9, 2014 on the BSE.

Shares of YES Bank continued to reel under pressure, slipping 4 per cent to hit an over five-year low of Rs 95 on the BSE. The stock of private sector lender was trading at its lowest level since May 9, 2014.

The stock took a beating after global agencies like UBS and Moody’s Investors Service downgraded the bank’s ratings. During the past month, YES Bank's share price tanked 38 per cent, as investors’ sentiment dented due to the bank’s exposure to debt-laden companies. In comparison, the benchmark S&P BSE Sensex was down 1 per cent during the same period.

“The review for downgrade takes into account our expectation that the ongoing liquidity pressures on Indian finance companies will negatively impact the credit profile of YES Bank, given the bank's sizeable exposure to weaker companies in the sector,” Moody's rating agency had said in rating rationale on June 11, 2019.

The ratings agency cited the private lender's classification of about Rs 10,000 crore of its exposures, representing 4.1 per cent of its total loans, under the watchlist which could translate into non-performing loans over the next 12 months.

Furthermore, UBS expects more asset-quality pressure on YES Bank than consensus, given the bank’s higher exposure to stressed corporates and lower recognition of these loans as gross non-performing loans. The brokerage firm has ‘Sell’ rating on the stock with the price target of Rs 90 per share.

“The bank’s credit growth might get affected as 'repair' work would involve significant rise in credit cost and could worsen given the lack of equity capital. Positive stock trigger would be fresh capital infusion from private equity (PE) funds, which would instill confidence in new management,” analysts at Elara Capital said in the company update.

At 02:43 pm, YES Bank was trading 3 per cent lower at Rs 96 on the BSE, against a 0.26 per cent rise in the Sensex. A combined 93 million shares changed hands on the counter on the BSE and NSE so far.