In the past four days, the share price of YES Bank tanked 26 per cent after YES Capital, one of the promoter entities of the private lender, sold nearly 2 per cent stake in the bank. In comparison, the S&P BSE Sensex was down 1 per cent during the same period.
YES Bank said with the share sales, total promoter/promoter group ownership in YES Bank has been reduced to 13.4 per cent in full compliance with Reserve Bank of India (RBI’s) regulatory levels of 15.0 per cent.
In a separate regulatory filing on Monday, YES Bank said, the bank has received acknowledgment from the Reserve Bank of India (RBI) to go ahead with the proposed increase in its authorised share capital.
Last week, the bank said it has received strong interest from multiple foreign as well as domestic private equity and strategic investors for this capital raise and remains firmly on course to raising growth capital subject to the necessary approvals.
Analysts at JP Morgan believe earnings normalisation for the YES Bank will start only in FY21 and that growth will take a hit until the equity-raising issue is resolved.
With persistent deterioration in asset quality which is above the previous assessment by a considerable proportion, analysts at JM Financial see profitability improvement as a long drawn and difficult process. In addition, increasing concerns in certain sectors (real estate, renewables) point to future risks, the brokerage firm said in a company update.
Thus far in financial year 2019-20 (FY20), the share price of YES Bank has plunged 85 per cent, against a per cent fall in the Sensex. Investors have seen market wealth erosion of Rs 52,850 crore thus far in the fiscal.
A sharp decline in the market value of YES Bank has seen the bank falling to 198th position in the overall market capitalisation ranking. As on March 29, 2019, the bank was stood at 45th position in m-cap ranking.