Yes Bank fell 2.44% to Rs 49.95 after a foreign brokerage reportedly cut its target price on the stock to Rs 46 from Rs 50 earlier.
According to reports, the brokerage also slashed the FY20 and FY21 profit estimate for the lender by 4-5%.On Tuesday, Brickwork Ratings downgraded its ratings on Yes Bank's lower tier II bonds, from BWR AA- to BWR A, and of upper tier II bonds, hybrid tier I bonds and innovative perpetual debt instruments from BWR A+ to BWR A-. The outlook to continue as negative.
The rating downgrade necessarily factors in the bank's higher levels of slippages to NPA in Q1 (Rs 6230 crore) and Q2 (Rs 5950 crore) of FY20 and its expectation to continue at similar high levelsfor the ensuing two quarters of FY20, bank's substantial exposure to sensitive sectors, groups and accounts, the uncertainties over raising adequate capital and maintain the capital adequacy ratios above the minimum regulatory requirement as of 31 March 2020 are the other key constraints. The outlook to continue as negative considering the risk of continuing weakness inasset quality and to monitor the capital raising plans of the bank to provide cushion to absorb anyincrease in risk weighted assets and assist credit growth.
Substantial capital infusion, increase in the loan portfolio and profitability, reduction inthe delinquency shall be the positives to improve the ratings/the outlook of the company.
However, shortfall in raising adequate capital impacting the CET-1 ratios of the bank as of 31 March 2020 and substantial deterioration in the asset quality impacting the profitability shall be the negatives that will impact the ratings/the outlook of the company.
In the past one month, shares of Yes Bank slumped 21.21%, underperforming the Nifty Bank index's 1.35% rise in the same period.
Also Read
Yes Bank reported a net loss of Rs 600.08 crore in Q2 September 2019 as compared to net profit of Rs 964.70 crore in Q2 September 2018. The total income of the bank fell 4.3% to Rs 8,332.21 crore in Q2 September 2019 over Q2 September 2018.
Yes Bank has pan-India presence covering 53 metro, 29 states and 7 Union Territories. The bank with 1120 branches, 1456 ATMs across the nation has an employee head count of 21,136 as of 31 March 2019.
Powered by Capital Market - Live News
Disclaimer: No Business Standard Journalist was involved in creation of this content