YES Bank hits over 4-mth high on rating upgrade; stock gains 50% in 1 month

Shares of YES Bank hit an over four-month high of Rs 18.90, up 9 per cent on the BSE in early morning trade on Wednesday after the bank announced that Brickwork Ratings has upgraded the rating of Tier I Subordinated Perpetual Bonds (Basel II) from BWRD to BWR BB+/ Stable. The stock of the lender was trading at its highest level since July 22, 2020.

With today’s gain, the stock of YES Bank has rallied 50 per cent in the past one month, as compared to a 9.5 per cent rise in the S&P BSE Sensex.

“The rating upgrade factors in improvement in capitalisation ratios of the bank, strong shareholder base, and experienced board members. The bank has a strong shareholder base with State Bank of India (SBI) holding a 30 per cent stake as of September 30, 2020 and the bank has an experienced board of directors with Mr. Prashant Kumar as the managing director and chief executive officer (MD & CEO),” Brickwork Ratings said in the rating action.

The rating is, however, constrained by the weak asset quality, impacting the profitability and moderate resource profile of the bank. The gross non-performing assets (NPAs) and net NPAs stood at 16.9 per cent and 4.7 per cent, respectively as of September 30, 2020. The ability of the bank to control slippages on account of Covid-19 related stress is a key monitorable, it said.

Earlier, on November 9, CARE Ratings had upgraded the bank's rating on debt instruments with a stable outlook. "The revision in the ratings assigned to the debt instruments of YES Bank factors in the improvement in the credit profile of the bank post the implementation of the reconstruction scheme announced by the Reserve Bank of India (RBI) and approved by Government of India (GOI) from March, 2020," CARE Ratings said in its rationale.