YES Bank plummets 30% after Q4 shocker

Shares of Yes Bank Ltd on Tuesday slumped nearly 30% as many brokerage firms downgraded the stock and cut target price after the lender reported surprise quarterly loss and guided to lower growth in the ongoing financial year. Yes Bank shares opened at ₹213.70 on BSE and dropped over 29.76% in intraday on NSE. At 1.18 pm, the scrip was trading at ₹170.20 on NSE, down 28.25% from its previous close. So far this year, it is down 2.15%. In comparison, India’s benchmark index Sensexfell 0.32% in in the afternoon today.

Foreign brokerage Macquarie double-downgraded Yes Bank to “underperform” with a 40% lower target price of ₹165 a share and cut fiscal year 2020-21 estimate earning per share by 45% each. Morgan Stanley is “underweight” on the stock and lowered its target price to ₹125 from ₹160 a share. Edelweiss Securities has downgraded the stock to “hold” from buy and reduced its target price to ₹250 a share, from ₹279 a share.

Kotak Institutional Equities has maintained “sell” rating on Yes Bank stock and revised its target price to ₹170 from ₹210 earlier. BoB Capital has downgraded Yes Bank stock to “sell” from “buy” and cut its target price to ₹210 a share from ₹275 a share. Antique Stock Broking has cut its rating to “hold” from “buy” and kept its target price to ₹215 a share, down 9% from its earlier target. Emkay has downgraded Yes Bank stock to “sell” from “hold” and lowered target price to ₹155 from ₹260 a share.

Australian brokerage Macquarie, which downgraded the stock by a full two notches, has admitted to underestimating the risks from the structured finance business of Yes Bank, its once-top stock pick. “We must eat the humble pie today and admit we underestimated the risks in structured finance. We got the call wrong,” Macquarie said in a note on Monday, adding over the past eight years, it felt the bank can thrive in a risky business like structured finance.

“As Yes Bank shifts from its historic focus on structured credit, there are multiple pressures – lower NIMs (net interest margin), fees, growth; weaker asset quality and capital. We expect a gradual turnaround under the new CEO,” said Morgan Stanley in a report to its investors.