In fact, since March 2020, individual bets have more than tripled on the stock, despite disappointing returns.
While fundamental analysts largely have a negative view of the stock, Crisil recently upgraded the bank’s rating on select debt instruments, on expectations of continued extraordinary systemic support from key stakeholders and a sizeable ownership by SBI. The stock barely moved. Technical analysis indicates a big reversal is unlikely on the stock, for now.
Nilesh Jain of Centrum Broking said YES Bank might see a pullback to the levels of Rs 12-12.50, as the stock is trading in oversold territory. He warned traders not to take any such gains as a sign of trend reversal and advised booking of profits if the scrip moved to Rs 13 level.
Major support for the stock stays at Rs 10.20, Jain said, adding that traders making a fresh entry on the counter should use this level as a stop loss.
Mazhar Mohammad of Chartviewindia.in said the stock traded in an extremely narrow trading range of Rs 11.30-10.50 for the last three weeks and was making indecisive formations, suggesting the counter might be positioning itself for a big swing in either direction. “However, considering the long-term trend, which is completely bruised and battered, upsides can be limited from current levels as the stock is trading even below its 2020 FPO price of Rs 12. Any stability above Rs 12 may extend the strength towards Rs 14. On the downside, corrections may get accentuated on a close below 10.50 levels,” Mohammad said.
Nagaraj Shetti, Technical Research Analyst at HDFC Securities said he does not see any substantial up move, as the stock has been in a continuous downtrend and fundamentals too are not supportive. “No big hopes for now,” he said.
Mohammad said if the stock falls to single digits for a week, the sentiment would turn extremely negative, which may eventually lead to a panic low of Rs 5.65. “Retail investors will be better off avoiding this counter,” he said.
Data showed individual investors, including retail and HNIs, accounted for 32.32 per cent stake in YES Bank as on June 30. These investors have hiked their stake in the bank for five consecutive quarters; it was 11.35 per cent in March 2020.
Rating agency Crisil recently upgraded its rating on select bonds and certificates of deposit of the bank, as it noted that there has been some stability in the bank’s deposit base in the past few quarters. After a reconstruction of the lender in March 2020, it has been adequately capitalised, it said. “At the same time, the ability of the bank to continue to build a strong retail liabilities franchise and a stable and sound operating business model with strong compliance and governance framework over the medium term needs to be demonstrated. Additionally, the bank’s asset quality is weak and the impact of the shift in business model to focus on granular retail and MSME segments will need to be seen over a longer period,” it said.
YES Bank’s total deposits have increased to Rs 1.63 lakh crore at June end from Rs 1.17 lakh crore as on June 30, 2020, and Rs 1.05 lakh crore as on March 31, 2020. The proportion of granular and sticky current account and savings account (CASA) deposits to overall deposits has also been improving. It stood at 27.4 per cent as on June 30 against 25.8 per cent on June 30, 2020. The bank’s capital position is adequate, supported by the capital raise of Rs 15,000 crore through a follow-on public offer in July 2020.
The common equity tier-I ratio and overall capital adequacy ratio stood at 11.6 per cent and 17.9 per cent, respectively, while the bank’s average liquidity coverage ratio remained adequate at 132 per cent in the June quarter, Crisil said.
But fundamental analysts are not impressed. Of 14 recommendations on the stock, there are 10 sell or strong sell calls, four hold but no buy recommendations. These analysts have a median 12-month price target of Rs 12 on the stock, with the lowest target standing at Rs 6.
The stock has not gained much even though the lender posted a 355.2 per cent YoY surge in net profit, at Rs 207 crore, in the June quarter, the highest quarterly profit since December 2018.
