YES Bank share rises after two days; here's why

YES Bank share was trading 1.5% higher in Thursday's session, ranking among the most active banking scrips in terms of volumes on both BSE and NSE. This was after the lender's CEO Prashant Kumar stated that he expects the bank's asset reconstruction company (ARC) business to operationalise within 6 six months and revealed that many foreign firms have shown interest in the bank's ARC business.

"There has been a lot of interest from foreign investors for our ARC business. We are likely to put in the initial capital of 10 billion rupees while the foreign investor will put in nearly 25 billion rupees," Prashant Kumar, CEO of Yes Bank, told Reuters in an interview late on Tuesday.

The stock of the private lender opened higher at Rs 16.45 against its previous close of Rs 16.40. The stock gained 1.5% to the day's high at Rs 16.65 and also hit an intraday low of Rs 16.30. The stock has gained after 2 days of consecutive fall.

YES Bank stock trades higher than 100-day moving averages but lower than 5, 20, 50 and 200-day moving averages.

The share has fallen 8% in a month. Year-to-date, the stock is down 7.6%. However, it has risen 1.54% in one week.

Market capitalisation of the lender rose to Rs 41,340.59 crore. The stock has touched a 52-week high of Rs 87.95 and a 52-week low of Rs 5.55. Share of the private lender, with Rs 2 face value has fallen 55% in one year.  

Meanwhile, Brickwork Ratings (BWR) has withdrawn the ratings of Tier I Subordinated Perpetual Bonds (Basel II) of the lender. Brickwork had given a long-term rating at BWR BB+ with a stable outlook on Rs 90 crore instrument.

The lender was placed under a moratorium by the central bank last year, after which consortium of lenders led by State Bank of India stepped in to infuse money into the bank and bail it out from deteriorating financial health to address systemic risk concerns.

Emkay Research gave a 'Sell' rating to the stock and set a target price of Rs 11 for the share, given sub-par return ratios and unfavourable risk-reward with higher valuations.

"We believe that the transfer of NPAs to a separate ARC (somewhat similar to IDBI in 2003) probably means window dressing standalone bank B/sheet,but we need to see the extent of hair-cuts, structure of ARC and recovery record in the ARC, which is not inspiring in case of IDBI SASF," Emkay Research said in its report.

Similarly, ICICI Securities said in a recent note that YES Bank's December-quarter earnings have aggravated fears of its asset quality issues and gave a "hold" rating on the stock with a revised price target of Rs 16.

"The portfolio vulnerability becomes visible from, a spike in standstill non-performing loans or NPLs (from 1.5% to 5%), SMA-2 pool (from 2.4% to 4%), SMA-1 (from 1.6% to 7.3), and additional restructuring outside of this pool at 3.2% over and above the labelled non-performing assets at 22%," it added.

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