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Yes Bank shares rebound. Should you accumulate at current levels?

Yes Bank’s share price has bounced back from a 2-year high in today’s session. Yes Bank share price opened lower today but quickly attracted buying interest among market bulls and climbed to an intraday high of 22.75 apiece on NSE, up about 3 percent from Wednesday’s close 22.10 each levels. Over the past five sessions, Yes Bank’s shares have soared 5.75 pm to 22.75 levels, logging nearly a 28 percent increase over this period.

According to Prabhudas Lilladher, shares of Yes Bank should stay up 20.75 levels each to maintain positive bias.

Vaishali Parekh, Vice President — Technical Research at Prabhudas Lilladher said: “Yes, Bank’s share price has witnessed a sharp improvement in bias after the long consolidation phase that took place between the 12 and 17 levels and signaled a breakout with decent volume participation to reinforce the trend. The stock has moved from 17 levels to 24.75 Friday to Tuesday sessions but witnessed a heavy profit posting on Wednesday to close close zone 22.”

Prabhudas Lilladher’s Vaishali Parekh added that a further rise in Yes Bank’s share price is expected but the share is above the previous peak zone of 20.75 levels to maintain the positive bias it has gained over the past five sessions.

“If Yes Bank’s share price stays up 20.75 apiece levels than we expect for the initial targets of 28 to 32 and then 37 levels in the next two to three months. Our opinion is denied as soon as a decisive breakthrough below 18 zone is witness.”

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A Morgan Stanley report says a strong cyclical improvement in private lender performance can be expected in the coming years. The brokerage also expects a strong RoA improvement aided by higher PPoP margins/lower cost of credit as the macro continues to improve.

Morgan Stanley’s research report highlights the strong fundamentals that could favor Yes Bank stock, saying: “We expect a strong RoA improvement of up to 1% by F25, aided by higher PPoP margins/lower cost of credit as the macro continues to improve. But at 1.6x F24 P/BV, the stock is factoring this in. Above 1% RoA, improvement will be difficult and gradual as we see much higher competitive intensity in this cycle.”

The brokerage added that Yes Bank has focused on mitigating asset quality challenges by accelerating provisioning and cleaning up its balance sheet (both organically and through asset sales). “We expect gross non-performing loans to fall to 9% by the end of F23 from a peak of 22% in March-20. Furthermore, in contrast to the previous cycle, the bank has focused on increasing the share of retail on both sides of the balance sheet. Indeed, the share of CASA + private deposits currently stands at 48% of total funding (versus 33% on March 20). In terms of assets, lending to individuals/SMEs has increased to 66% versus 44% in March 20 (implied CAGR of 23%),” the brokerage said.

Ravi Singhal, CEO of GCL Securities, asked Yes Bank shareholders to hold the shares for the long term and said: 44 goal in mind.” Ravi Singhal of GCL Securities advised the shareholders of the bank Yes to upgrade trailing stop loss to 17 levels each.

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disclaimer: The views and recommendations made above are those of individual analysts or brokerage firms, and not of Mint. We recommend that investors check with certified experts before taking anything investment decisions.

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