INSUBCONTINENT EXCLUSIVE:
91 per cent plunge in profit
Even the most optimistic analyst call on the stock does not suggest much upside.
This, even as the scrip traded below its book value
On Thursday, CEO Ravneet Gill told ETNOW in an interview that all slippages reported for the quarter were out of the book comprising loans
that are rated BB or below, which he felt has bottomed out.
But the stock was jittery, plunging 14.98 per cent to hit a 52-week low of Rs
At this price, the stock traded below Rs 114.30 book value that the bank reported for June quarter.
A P/B ratio less than one is seen as
buying opportunity by some market participants
But, many a time, it also suggests that the company is earning weak or negative returns on its assets, or the assets are overstated
The disappointing June quarter earnings by YES Bank followed a Rs 1,507 crore surprise loss in March quarter.
Foreign brokerages CLSA, JP
Morgan and Nomura have slashed their price targets on the stock to Rs 110
Morgan Stanley sees the stock at Rs 95, Credit Suisse at Rs 94, PhillipCapital Rs 85 and Jefferies at Rs 50! Antique and Axis Capital have
wait for a couple of more quarters
The decline in revenue could accelerate as the bank would start pulling back loans to maintain capital adequacy ratio (CAR)
The pegged the fair price for the stock at Rs 70
Meanwhile, there is a risk of the liability franchise weakening further.
Credit Suisse has cut its EPS estimate by 72 per cent on the back
The brokerage expects weaker growth and higher credit cost, even as the bank management maintained its prior credit cost guidance of 125
June quarter fee income of the bank dropped 51 per cent YoY to Rs 608 crore.
Nirmal Bank Institutional Equities said all net slippages from
the corporate book, which amounted to Rs 4,554 crore, emerged from the sub-investment grade book
That said, Rs 2,100 crore worth of material slippages also emerged from outside the pre-designated watchlist, which is a moderate negative
Gross non-performing assets spiked to 5.01 per cent from 3.22 per cent in March quarter and 1.31 per cent in the year-ago period.
The bank
said net provisions at Rs 1,784 crore were the result of rating downgrades of investments in companies of two financial services groups
of the two accounts and the entertainment sector account could be better for lenders
Equity raise and resolutions over the next two quarters hold key for the bank, said JP Morgan
It pointed out that capital buffer is low for the bank, and it needs to raise equity quickly
