YES Bank Shares in Spotlight After Rs 201 Crore NPA Recovery

YES Bank shares are expected to remain in the spotlight as the private lender announced a one-time settlement related to a non-performing asset (NPA), resulting in a recovery of Rs 201 crore.

In a recent stock exchange filing, the bank stated that it had executed a one-time settlement (OTS) concerning a non-performing asset. The borrower paid Rs 201 crore as full and final settlement of dues owed to the bank. The net amount received, after adjusting for the carrying value of the asset, surpassed the materiality threshold under amended listing norms, prompting a disclosure under Regulation 30.

This development comes shortly after international rating agency Moody’s upgraded YES Bank’s credit rating to Ba2 from Ba3 and changed the outlook to stable. The agency cited improvements in the bank’s credit profile and also raised its baseline credit assessment (BCA) to ba3 from b1.

Moody’s noted that YES Bank’s Ba2 deposit rating stands one notch above its ba3 BCA, reflecting the agency’s expectation of a moderate likelihood of government support during times of need.

In another significant update, the Reserve Bank of India (RBI) has granted a six-month extension to Managing Director and CEO Prashant Kumar, effective from October 6 or until a new chief executive takes charge. Kumar’s current term ends in October, and the bank has already begun a global search for his successor.

In May, Sumitomo Mitsui Banking Corporation (SMBC) signed a definitive agreement to acquire a 20 percent stake in YES Bank for Rs 13,483 crore, at a price of Rs 21.5 per share. This deal involves acquiring 13.19 percent from State Bank of India and 6.81 percent from other banks, including Axis Bank, HDFC Bank, and ICICI Bank.

Despite the recent developments, analysts remain cautious. According to Trendlyne, the average target price for YES Bank is Rs 17, indicating a potential downside of around 16 percent from current levels. Out of the 12 analysts tracking the stock, most maintain a ‘Sell’ recommendation.

The stock has risen 17 percent over the past three months but remains 18 percent lower over the past year. YES Bank’s current market capitalisation stands at Rs 61,941 crore.