YES Bank hits 52-week high in dismal trade; stock soars 14% in 4 days

In the past two months, the stock has zoomed 48% and is currently trading at its highest level since December 2022

Shares of YES Bank jumped 5 per cent to hit a 52-week high of Rs 23.71 on the BSE in Tuesday’s intra-day trade on the back of heavy volumes.

The stock of the private sector lender was quoting higher for the fourth straight trading days, surging 14 per cent during this period. In the past two months, it has zoomed 48 per cent.

The stock surpassed its previous high of Rs 23.05 touched on December 19, 2023. It was trading at its highest level since December 2022.

The counter recorded huge trading volumes with a combined 453.7 million equity shares changing hands on the NSE and BSE till 11:15 AM. In comparison, the S&P BSE Sensex was down 0.85 per cent at 71,656.

Amid a challenging environment with respect to interest rates, deposit growth slowdown and tightening liquidity, the bank managed to deliver year-on-year (YoY) expansion in both operating profitability and net profitability in the September quarter (Q2FY24).

YES Bank reported a 47 per cent YoY increase in its standalone net profit at Rs 225 crore, helped by a drop in loan-loss provisions and healthy loan growth.

Its gross non-performing asset (NPA) ratio was at 2 per cent at the end of September, unchanged from the end of the previous quarter.Net NPA declined to 0.9 per cent from 1 per cent in the June quarter (Q1FY24).

The improved granularity of the portfolio coupled with strengthened risk management practises across asset segments should support underlying asset quality going ahead, according to analysts.

YES Bank has seen recoveries and upgrades from bad accounts, which have offset the slippages during FY23, keeping NPA levels stable in absolute terms, asper CARE Ratings.

While the bank has been making provisions to increase its provision coverage, which has kept the credit costs elevated and profitability moderate, the ability of the bank to maintain the asset quality once the performance of the relatively new retail products is established, would be a key rating monitorable, it said in a report on October 4. 

The positive outlook is on account of expectation of continued improvement in the business profile, which would lead to improvement in profitability along with maintenance of comfortable asset quality parameters, the rating agency had said.

YES Bank raised Rs 8,887 crore in FY23, of which Rs 6,041 crore was received during the fiscal through a mix of preferential allotment of shares and warrants, while the remaining Rs 2,846 crore is expected to flow in upon the conversion of the warrants in fiscal 2024 and fiscal 2025.

This would support the bank’s growth going ahead, according to CRISIL Ratings.

The ability of the bank to continue to build a strong retail liabilities franchise and a stable and sound operating business model with strong compliance and governance framework needs to be demonstrated over the longer term along with the ability of the bank to enhance its profitability levels, it says. 

Additionally, the impact of the shift in business model to focus on granular retail and micro, small and medium enterprises (MSME) segments and selective working capital loans in the corporate segment will need to be seen over a longer period, the rating agency said in a rationale.