YES Bank shares at Rs 19 or Rs 33? Where is the stock headed post RBI's nod to HDFC Bank proposal

Shares of YES Bank Ltd surged as much as 13 per cent during the trading session on Monday after the Reserve Bank of India (RBI), approved HDFC Bank Ltd to acquire up to 9.5 per cent stake in the private lender. YES Bank informed about the same through an exchange filing on Tuesday, citing RBI's letter dated for Monday, February 5.

The RBI, while granting the above referred approval has also conveyed that if the applicant (HDFC Bank) fails to acquire major shareholding within a period of one year from the date of aforesaid RBI letter, the approval shall stand cancelled, said the exchange filing by YES Bank.

The applicant shall ensure that the aggregate holding in YES Bank does not exceed 9.50 per cent of the paid-up share capital or voting rights of the Bank at all times, it added. "If the aggregate holding falls below 5 per cent, prior approval of RBI will be required to increase it to 5 per cent or more of the paid-up share capital or voting rights of the bank."

Kranthi Bathini, Director of Equity Strategy at WealthMills Securities believes that, prima facie, the additional stake acquisition by HDFC Bank in YES Bank is largely positive for the latter one from the long-term perspective providing its stability. "However, one needs to see how this stake acquisition pans out over the period and YES Bank performs in the upcoming quarters," he said.

Following the announcement, shares of YES Bank surged more than 12.63 per cent on Tuesday to Rs 25.68 on Tuesday, commanding a total market capitalization close to Rs 74,000 crore. The scrip had settled at Rs 22.80 in the previous trading session on Monday.

Shares of YES Bank surged more than 85 per cent from its 52-week low at Rs 14.10 hit in October 2023 to Rs 26.25 on January 16 before the December 2023 earnings. However, the stock saw profit booking and dropped about 15 per cent since then.

Even on the technical parameters, YES Bank is showing signs of reversals and recovering from its near-term support. Experts believe that the lender is likely to move towards new highs, once its sustain aboves the key resistance levels.

The stock is indicating a reversal nearing the key support of Rs 22.55, its 50-simple moving average (SMA). This momentum must now absorb all the selling pressure emerging in the range of Rs 26-25.50 to embark on the next upward rally, said Avdhut Bagkar Derivatives & Technical Analyst at StoxBox

"The underlying trend continues to remain optimistic until the stock trades over its 200-SMA placed at Rs 18.50. A decisive breakout over 26 mark shall send the price action in the direction of Rs 30 to Rs 33 levels," he said.

YES Bank is in a continued rally from Rs 19 to Rs 24. The stock has again seen a bullish canddlestick pattern formation at the current juncture, at the Rs 24-level, which may continue its rally till its next resistance level of Rs 26 and Rs 29, said Ganesh Dongre, Senior Manager - Technical Research, Anand Rathi Shares and Stock Brokers "Traders can hold the stock with a stop loss of Rs 22 for the target price of Rs 29 in the coming weeks."

YES has witnessed a decent rally from Rs 16 levels with series of higher lows pattern formation on the daily chart to peak out near 26.25 zone and thereafter, with a short correction seen, has cooled off from the overheated zone, said Shiju Koothupalakkal - Technical Research Analyst, Prabhudas Lilladher.

"The stock has taken support near the significant 50EMA level of Rs 22.60 zone and indicated a bullish candle formation to improve the bias once again and with a higher low pattern formed once again has improved the bias. We expect the stock to rise till the initial target of Rs 27 and thereafter with strength sustaining can achieve the next target of Rs 32 levels," he said.

In the December 2023 quarter, YES Bank had reported a net profit of Rs 231 crore, surging about 440 per cent on a year-on-year (YoY) basis. Its net interest income (NIIs) rose 2.4 per cent YoY to Rs 2,017 crore in Q3FY24. Net interest margins (NIMs) for the quarter were at 2.4 per cent.

The quarter’s performance is broadly on expected lines. Performance on NIM has been marginally ahead, as the increase in cost of funds has been slower, Kotak Institutional Equities said. RoEs are still weak and unchanged qoq at 2 per cent and the path to normalized RoE or that closer to peers is still a few years away," it added with a 'sell' rating on the stock with a fair value to Rs 19.

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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