YES Bank shares brace for selloff as lock-in period ends today: Stock has 64% 'sell' calls

YES Bank's three-year lock-in period ends today. It means investors, whose shares were locked-in for three years since March 13, 2020, onwards would be free to sell those shares from today. They included private lenders and investors.

SBI, which was mandated not to reduce its holding below 26 per cent, saw its lock-in period ending last week. In total, the SBI-led consortium had infused Rs 10,000 crore in YES Bank in a bid to restore its financial health and help it meet liquidity, capital and other critical parameters.

As of the latest shareholding pattern, SBI held 26.14 per cent stake in the private bank. Mortgage lender HDFC owned 3.48 per cent stake ICICI Bank 2.61 per cent; Axis Bank 1.57 per cent stake; Kotak Mahindra Bank 1.32 per cent stake and IDFC First Bank 1 per cent stake in the private lender.

At Friday's closing, these lenders would be making profits to the tune of 65 per cent for the three-year period as they were allotted YES Bank shares at Rs 10 each. For small investors, the scrip was volatile, three years ago. On March 13, 2020, the scrip had closed at Rs 25.55. At last close, it traded at Rs 16.52. Despite this, the scrip still commands the lowest 'Buy' percentage (at mere 7 per cent) among top 100 companies. It is among the least covered stock (14 analysts) in the top 100 pack. Also, 'Sell' recommendations (64 per cent) on the stock is among the highest in the largecap pack.

In total, the scrip has just one 'Buy' call, nine 'sell' calls and four 'Hold' calls. The consensus target on the stock stands at Rs 17. Despite this, the stock is tracked a lot by retail investors. This is because with 47.28 lakh retail investors, who owned 642.31 crore YES Bank shares, as on December 31, 2022, YES Bank has the highest number of retail investors for any listed company on NSE, as per PRIME Database. Retail investors owned Rs 13,232 crore worth shares at the end of December quarter compared with Rs 10,052 crore as of September 30, 2022. At last count, the 22.34 per cent stake they held in the private lender amounted to Rs 10,612.08 crore.

The bank in its recent earnings call said it was confident of achieving advances growth of more than 15 per cent with 10 per cent large corporate advance growth and over 25 per cent advance growth in retail MSME and medium enterprises. It expected the share of Retail and MSME segments to further improve by 400 basis points. It expected gross non performing assets (NPA ) ratio of 1.5-2 per cent by FY23-end and was targeting return on asset (RoA) of 75 bps by end FY23 and over 100 bps in the medium term.

ICICI Securities said YES Bank's decision to writedown AT-1 bonds being challenged in Court is a key risk for the stock going ahead. Besides, the supply overhang due to expiry stays.

ICICIdirect said YES Bank has witnessed a gradual improvement in business growth as well as asset quality in lthe ast six quarters. Recently, the bank concluded sale of stressed assets to JC Flower, which has led to substantial reduction in GNPA to 2 per cent.

"Going ahead, the bank is poised to pedal higher advance growth (driven by granular retail assets) as it concluded Rs 8,900 crore of capital raised from Carlyle and Advent. Focus on growth along with margin improvement may enable the bank to improve its RoA to guidance of 0.9-1 per cent in FY25. However, given Security Receipt (SR) of Rs 3,770 crore (from sale of stressed assets of face value of Rs 6,800 crore) and ageing on the same, earnings could remain volatile on quarterly basis," said ICICIdirect.

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