Synopsis: Despite reporting a 47% rise in net profit for Q1 2024, Yes Bank's share price has fallen due to profit-booking and speculation about a potential stake sale by SBI. The bank's improving fundamentals did not prevent a 5% decline in stock value over the past three sessions.
Yes Bank recently announced its Q1 2024 financial results, revealing a substantial 47% year-on-year increase in net profit, rising to Rs 502 crore. Despite this positive performance, the bank's share price has experienced a notable decline, slipping by around 5% over the last three trading sessions. This unexpected drop has been attributed to a combination of profit-booking by investors and market speculation regarding a potential stake sale by the State Bank of India (SBI).
On Monday, Yes Bank shares initially surged following the earnings announcement, reaching Rs 25.67. However, this upward momentum was short-lived, as the stock opened lower at Rs 24.59 on Tuesday and continued to fall, touching an intraday low of Rs 24.42. The continuous slide in share price over the past three sessions highlights investor concerns despite the bank’s improving financial health.
Stock market analysts have identified two primary reasons for this decline. Firstly, profit-booking has been a significant factor. After a sharp rise in share prices post-earnings announcement, many investors chose to book profits, leading to a downward pressure on the stock. This trend was anticipated by market experts, given that the stock had already factored in the positive earnings results.
Secondly, market speculation about SBI's potential stake sale in Yes Bank has further fueled the decline. Following the Government of India's decision to sell its stake in IDBI Bank, there has been speculation about a similar move by SBI regarding its holdings in Yes Bank. Although SBI has denied any immediate plans for such a sale, the mere speculation has made investors wary, prompting them to reduce their positions in Yes Bank.
Avinash Gorakshkar, Head of Research at Profitmart Securities, emphasized that the fall in Yes Bank’s share price is primarily driven by profit-booking and speculative activities. He advised investors to focus on the bank's strong fundamentals and consider bottom fishing opportunities given the current market conditions.
In terms of operational performance, Yes Bank reported a 12.2% year-on-year increase in net interest income (NII) to Rs 2,244 crore, along with a significant reduction in provisions by 41.2% to Rs 212 crore. The bank's gross non-performing assets (GNPA) improved to 1.7% from 2%, and net NPAs decreased to 0.5% from 1% in the same period. These improvements reflect Yes Bank’s ongoing efforts to strengthen its financial position and enhance its profitability.
Looking ahead, Yes Bank aims for robust loan and deposit growth, targeting a loan growth of 16-17% and a deposit growth of 20-22% in FY25. The bank's focus on the SME and mid-market segments is expected to drive this growth. Additionally, measures to reduce the Rural Infrastructure Development Fund (RIDF) balances are anticipated to further improve the bank’s asset quality.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors are advised to conduct their own research or consult with a financial advisor before making any investment decisions. The views and opinions expressed in this article are based on the information available at the time of writing and are subject to change.
