Shares of private lender Yes Bank ended 28.7 percent down at Rs 227.05 on the BSE. It has touched a 52-week low of Rs 210.10 in the early trade after Reserve Bank of India (RBI) cut the tenor of Rana Kapoor, a promoter, chief executive and managing director, till January 31, 2019.
The share remained the top loser on the indices as its market cap eroded by more than Rs 21,000 crore today.
The board of directors of the bank are scheduled to meet on September 25, 2018 to decide on the future course of action.
Also, Moody's Investors Service on Thursday affirmed its ratings on the bank. The rating agency has maintained the outlook on the ratings as stable.
As Reserve Bank of India (RBI) had curtailed the term of Rana Kapoor, most of the brokerages have downgraded the stock and also slashed the target price.
Brokerage: IDFC Securities | Rating: Underperform | Target: Rs 230
IDFC Securities has downgraded the stcoks to underperformer from neutral with potential downside of 28 percent. Broking firm also cut target to Rs 230 from Rs 350 per share.
According to IDFC Securities the cut in Rana’s tenor is a very big negative for the bank as it will slow down loan and fee growth and this could also impact bank’s ability to raise high net worth deposits.
This risk has not been priced in and expect significant correction, it said further.
Brokerage: Citi | Rating: Sell | Target: Rs 270
Research house Citi has downgraded the stock to sell from buy with a potential downside of 15 percent. It also cut the target price to Rs 270 from Rs 440 per share.
The firm believes that there is premium attached to the stock due to Rana Kapoor and banks will have likley to defer its capital raise plans, which will be impact growth of the comapny.
Time period of over four months could prove short to find a suitable external candidate, it feels.
Brokerage: Macquarie | Rating: Outperform | Target: Rs 425
Forgien broking house Macquarie has maintain outperform rating on Yes Bank with a target of Rs 425 and expect potential upside of 33 percent on the stock.
The rejection is a major negative development, while absence of any communication from bank or RBI will be an overhang on stock, it added.
Brokerage: Goldman Sachs | Rating: Neutral | Target: Rs 300
Goldman Sachs has downgrades the stock to neutral from buy and cut taregt to Rs 300 from Rs 383 per share.
The current news may create uncertainty on strategic direction, also future growth and profitability of the bank is uncertain.
Bank’s current CET-1 capital ratio at 9.5% is close to 8%. It cut the earnings estimates by 11% to 18% for FY19-21.
Brokerage: Nomura | Rating: Neutral | Target: Rs 345
Broking house Nomura has downgraded the stock to neutral from buy and cut target to Rs 345 from Rs 500 per share.
According to Nomura, the base case target price is at Rs 365, if capital raising becomes difficult.
The firm has cut its earnings growth estimate for the next two years to 20 percent, while credible external CEO candidate and lower FY18 divergence will be positive catalysts.
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