Yes Bank shares are on an upswing. Here’s why

Private-sector lender Yes Bank, which signed a binding agreement earlier this month to offload a large block of stressed loans to JC Flowers Asset Reconstruction Pvt. Ltd, has been one of the more active securities on the stock exchange by volume of shares traded.

On Wednesday, the bank saw fresh noise on its counter with its share price rising more than 7% to Rs 14.72 apiece in a Mumbai market that was up 0.7% in late afternoon trade. More than four crore shares had changed hands on the BSE by late afternoon. This is more than twice the two-week average volume. 

One of the reasons was the firm announcing that its board is scheduled to meet this Friday to consider and evaluate the proposal for raising of funds by way of a rights issue, preferential allotment, qualified institutions placement or through any other permissible mode.

This would be through an issue of equity shares, convertibles and/or any other eligible securities.

Results and management view

The announcement comes days after the bank disclosed its financials for the first quarter ended June 30. The results declared during the weekend showed the bank posted a profit of Rs 311 crore in Q1 FY23, up 50% year on year. Net interest income rose 32% to Rs 1,850 crore.

Advances were up 14% year on year, deposits grew 18% and disbursements jumped 87% to Rs 22,636 crore in the quarter.

Gross non-performing asset (NPA) ratio at 13.4% was still high but improved from 15.6% in Q1FY22 and 13.9% in Q4FY22. Meanwhile, the net NPA ratio improved to 4.2% from 5.8% in Q1FY22 and 4.5% in Q4FY22.

Prashant Kumar, MD and CEO, Yes Bank, said, “Q1FY23 has been a stable quarter with progress across fresh disbursements momentum, improving granularization of assets, steady profitability and consistently improving asset quality metrics. The balance sheet is now resilient to navigate the volatile interest rate environment, and the bank remains on track to achieve the FY23 as well as medium term guidance and objectives.”

He noted that during the quarter, the bank came out of the asset reconstruction scheme with formation of the alternate board. In addition, a term sheet has been signed for sale of identified pool of stressed assets to the ARC. A successful sale of stressed assets will be the largest such deal in India and a significant milestone in the bank’s turnaround journey.