On BSE, Yes Bank shares settled at ₹17.14 apiece up by ₹1.95 or 12.84%. The shares have touched a new 52-week high of ₹12.84 apiece - resulting in a 17.7% rise in the day.
The bank's market capitalisation is around ₹42,944.24 crore.
Compared to July 29 level where the bank's shares stood around ₹14.94 apiece, Yes Bank shares have climbed by 19.68% in two days of trading sessions this week taking into consideration its new 1-year high.
Last week, on Friday, Yes Bank announced raising equity capital to the tune of $1 billion ( ₹8,900 crore) from funds with two global private equity investors - Carlyle and Advent International, with each investor potentially acquiring up to a 10% stake in the bank. The funds will be raised in a combination of $640 million ( ₹5,100 crore) in equity shares and $475 million ( ₹3,800 crore) through equity share warrants. This would be one of the largest private capital raises by an Indian private sector bank.
The $1 billion fundraise is expected to further bolster the capital adequacy of Yes Bank. It is expected to aid the bank's medium to long-term sustainable growth objectives.
Under the fundraising, Yes Bank has proposed to issue 370 crore equity shares on a preferential basis at ₹13.78 per equity share and 257 crore warrants convertible into equity shares at ₹14.82 per warrant - adding ₹8,900 crore to its equity capital base.
Research Analysts Kunal Shah, Renish Bhuva, and Chintan Shah at ICICI Securities in their report said, "Positivity is setting in for YES Bank with the proposed equity capital raise of Rs89 billion ($1.1 billion) from Carlyle and Advent International, with each investor potentially acquiring up to 10.0% stake in YES Bank (Link). This confidence as well as growth capital will boost CET-1 by 3.84% to almost 15.7%. Also, since it is being raised close to the book value (at Rs13.78 for share issue and Rs14.82 for warrants), it will not be book value dilutive."
As per the analysts, with benefits of likely credit rating upgrade and optimal capital utilisation with improved growth profile, it is unlikely to be earnings or RoE dilutive. An incremental trigger will be transfer of bulk of the bank’s stress pool to ARC having signed a binding term sheet with JC Flowers ARC. Management expects GNPAs to reduce by Rs260 billion and net NPAs by ₹83 billion as and when the deal is executed (anticipated by Q3FY23).
"After pencilling in an RoA of 0.4% in FY22, driving it towards the FY23 target of 0.75% and FY25 target of 1.0-1.5% will require advances growth to scale up to mid-teens and cost efficiencies, besides further improvement in NIM trajectory and sustained credit cost. The proposed equity raise will provide confidence as well as growth capital to scale up RoA to targeted levels," the analysts added.
On stock price, the analysts said, "We see a turnaround in relevant operating metrics and improved confidence in the stability of the franchise. With these developments, we revise our target multiple to 1.2x FY24E ABV (vs 1.1x previously) giving us a target price of Rs15.7 (earlier: Rs14.0). We remain cognisant of the risks arising from net labelled exposure of 5.0%, delay in the resolution of stress pool, modest RoE profile during transition and supply overhang post the expiry of lock in shares. Maintain HOLD."
Yes Bank has announced its financial performance for the quarter ending June 30, 2022 (Q1FY23) period. In Q1 this fiscal, Yes Bank registered a 50% yoy growth in net profit to ₹311 crore, while net interest income (NII) rose 32% yoy to ₹1,850 crore. Net interest margin (NIM) for the quarter is at 2.4% up nearly 30 basis points year-on-year.
In Q1FY23, the bank's gross NPA and net NPA improved to 13.4% and 4.2% from 15.6% and 5.8% in Q1FY22, and the improvement was marginally from 13.9% and 4.5% in Q4FY22. Slippages were lower at ₹1,072 crore in Q1FY23 versus ₹2,233 crore in Q1FY22. Yes Bank's resolution momentum continues with total recoveries and upgrades at ₹1,532 crore in line with the annual guidance of ₹5,000 crore.
With effect from July 15, 2022, Yes Bank has successfully come out of the Reconstruction Scheme with the formation of an alternate Board. The new Board has recommended the appointment of Prashant Kumar as MD & CEO for three years, subject to the approval of the Reserve Bank of India and Shareholders.
Also, the bank signed a binding term sheet with partner JC Flowers to form an ARC with the objective of the sale of an identified pool of nearly ₹48,000 crore of stressed assets.
