YES Bank share hits upper circuit of 5%, here's why

YES Bank share price hit upper circuit of 5% in Tuesday's early session after it announced that CARE Ratings has revised its rating on lender's debt instruments.

The rating agency has revised the bank's infrastructure bonds rating to 'CARE BBB' from previous 'CARE B'.

YES Bank share price opened at Rs 13.54 today, also the day's high, rising 4.96% in today's session against earlier close of Rs 12.90 on BSE.

The stock has risen 10.44% in the last 4 sessions. There were only buyers and no sellers for the stock. Stock price of YES Bank has risen 3.12% in the last one month. However, the share has declined 71% since the beginning of the year.

YES Bank stock is trading higher than 5, 20 and 50-day moving averages but lower than 100 and 200-day moving averages. Market capitalisation of the lender stood at Rs 33,924 crore.

Shares of the private lender quoted a 52-week high price of Rs 87.95 and a 52-week low of Rs 5.55.

Also, the brokerage revised YES Bank's outlook to 'Stable' from previous "Under Credit watch with Developing Implications" on the above-mentioned instruments. It has also given 'CARE BB+' rating each on YES Bank's Upper Tier II Bonds and Perpetual Bonds (Basel II) from previous 'CARE D'.

In its note, CARE Ratings said, "The revision in the ratings assigned to the debt instruments of Yes Bank Limited (YBL) factors in the improvement in the credit profile of the bank post the implementation o the reconstruction scheme announced by the Reserve Bank of India( RBI) and approved by Government of India (GOI) from March 2020. The reconstruction scheme for YBL has brought about strong systemic support to the bank by various market participants including GOI, RBI and SBI acting in order to protect the depositors' money by way of providing capital support, liquidity support and reconstitution of the board of directors for better governance."

"The ratings also factor in the improvement in the bank's capitalisation levels post the follow on public offer (FPO) of equity shares by which the bank raised additional equity capital of Rs 15,000 crore in July 2020, and bank's return to profitability in H1FY21. The ratings also factor in the improvement in bank's liquidity profile, majorly on account of stabilization in its deposits which also enabled the bank to repay the SLF in September 2020 prior to the due date. The ability of the bank to grow its scale through the build-up of granular advances and broad-based deposit mobilization would be a key monitorable," It added.

Meanwhile, most analysts have 'sell' ratings on the scrip trading in single digits this year. Kotak Institutional Equities has a sell rating on the stock at a price of Rs 13, with fair value at Rs 11, with a downside of 15%.

Last week, share of the private sector lender that exited from Nifty and Sensex was on a decline since the bank reported its June-Sept quarter earnings. The lender posted a net profit of Rs 129.37 crore for the September quarter compared with Rs 600.08-crore loss posted in the corresponding period last year.

Sequentially, YES Bank's net interest income (NII) rose 3.4% to Rs 1,973 crore in Q2 from Rs 1,908 crore in the previous quarter. On a yearly basis, NII was down by 9.7% from Rs 2,186 crore.

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