Yes Bank erodes nearly half of its market value in five weeks
Mumbai: Investors in Yes Bank Ltd lost at least RS.43,000 crore of their wealth in merely five weeks over uncertainty about the bank’s performance and its next boss after the Reserve Bank of India refused to reappoint current CEO Rana Kapoor for three years. The bank’s stock has plunged 49%, eroding the lender’s market capitalization by nearly 50% from Rs. 91,000 crore on 20 August. On Thursday, the stock closed at Rs 203.20 on the BSE, down 9.14% from its previous close. Year to date, it has fallen over 34%.
There has been continuous selling pressure on the stock due to lack of clarity and expectations of a delay on the appointment of a new CEO.
“As of now, we see divergent potential outcomes and hence prefer to stay on the sidelines” said Morgan Stanley in a note to its investors.
Yes Bank on 25 September sought more time for Kapoor. Analysts believe the RBI may not agree.
The board in its meeting on Tuesday decided to set up a search committee to identify a successor to Kapoor. The committee will include three board members along with two external experts.
“Uncertainty over approvals from the RBI for both MD & CEO and EDs will keep the near-term stock performance muted,” said Prabhudas Lilladher in a note.
The board also decided to promote Rajat Monga and Pralay Mondal as executive directors, subject to approval from the RBI.
“As we factor in somewhat slower growth, we trim our earnings estimates (-4%/-8% for FY19/20), leading to a lower target P/BV multiple of 2.0x (vs. 2.2x earlier),” Deutsche Bank said in a report.
