New Delhi: Shares of Yes Bank fell close to 24 per cent in early trading on Friday after Reserve Bank of India (RBI) cut the tenor of chief executive and managing director Rana Kapoor till January 31, 2019.
The share touched a 52-week low of Rs 210.10 soon after the opening bell before recovering a bit to Rs 242 at the time of filing this report.
The board of directors of the bank are scheduled to meet on September 25, 2018 to decide on future course of action.
The private lender’s stock was expected to fall as most top brokerages downgraded it and slashed the target price after the Reserve Bank of India asked Kapoor to step down. Citi downgraded the stock to ‘sell’ from ‘buy’ while IDFC Securities lowered its rating to ‘neutral’ from ‘underperformer’.
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.
Moody's Investors Service, however, affirmed its ratings on the bank. The rating agency has maintained the outlook on the ratings as stable.