No cheer for YES Bank shares after Rakesh Jhunjhunwala’s stake buy

Our Bureau Mumbai | Updated on November 07, 2019 Published on November 07, 2019

The share price of YES Bank has had a muted response to the news of high networth individual, Rakesh Jhunjhunwala, picking up a minor stake in the bank. Just days ago YES Bank shares spiked up over 30 per cent to touch a high of Rs 78 from around Rs 50.

But analysts believe the counter is still witnessing selling pressure and lacks investor trust, which is the key reason for the share price not moving up sharply, despite regular commentary by the bank management and Jhunjhunwala’s recent stake buy.

Usually, news of the high networth Jhunjhunwala picking up stake in any company is followed by a massive rally in the counter, as it gives investors confidence about the fundamental story behind the company. Jhunjhunwala has a wide fan following among equity market investors in India due to his past record of picking up multi bagger stocks.

Jhunjhunwala had reportedly purchased a total of 1.29 crore YES Bank shares at an average price of Rs.67.10 per share. On Wednesday, YES Bank was traded at around Rs 67.

Quarterly results

The recent poor show in quarterly results, where the bad loan numbers were a surprising and confusing commentary from the bank management, is the reason why investors are keeping away from the counter, analysts said. YES Bank recently said it had binding offers from funds to invest up to $1.2 billion through an equity infusion in the bank. A day after making this statement, the MD and CEO, Ravneet Gill, told a news channel that offers for infusion of funds into the bank could also go up to $3 billion. Gill has been saying for many weeks now that large foreign tech companies and funds are interested in YES Bank. Yet, nothing concrete has been announced so far, which has resulted in investors taking the statements less seriously.

Sources told BusinessLine that YES Bank could go for a qualified institutional placement, the pricing of which could be around its current market price. Earlier, HDFC Mutual Fund had piked up a stake in the bank at around Rs 90 per share, which could be the near-term top for the share price, until the financial numbers improve.

YES Bank on November 1 reported a loss of Rs 600.08 crore for the September quarter, due to a one-off DTA adjustment of Rs 709 crore. Excluding this one-time hit, adjusted profit was Rs 109 crore. But the bank had posted a Rs 964.70-crore profit in the corresponding quarter last year. This is the bank’s second largest loss since listing, and follows the Rs 1,506.60-crore loss in the March quarter this year. Gross non-performing assets for September rose to 7.39 per cent, from 5.01 per cent in the June quarter and 1.6 per cent in the year-ago period.

Published on November 07, 2019
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