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India’s Yes Bank Shares Surge as Much as 29% After Analyst Call

Yes Bank climbed as much as 29% after collapsing more than 40% in the last five sessions.

India’s Yes Bank Shares Surge as Much as 29% After Analyst Call
Signage of Yes Bank seen at the entrance of one of its branch in Bengaluru, India. (Photographer: Anirudh Saligrama/BloombergQuint)

(Bloomberg) -- Shares of troubled Indian private lender Yes Bank Ltd. surged after the management on Thursday told analysts that a sale of the founders’ stake in the lender was the reason behind the tumble in its stock price.

  • A forced sale of 100 million shares after an invocation of pledge on a large stakeholder’s holding led to the slump on Tuesday, according to a filing on Wednesday when markets were closed for a holiday.
  • The stock climbed as much as 29% after collapsing more than 40% in the last five sessions.
  • Its 2023 dollar bonds rose 3.4 cents on the dollar after slumping a record 7.3 cents on Wednesday. The notes are currently indicated at 82.3 cents.
India’s Yes Bank Shares Surge as Much as 29% After Analyst Call

Highlights from the Call

  • The decline in share price isn’t reflective of bank’s performance; bank fundamentally remains strong, CEO Ravneet Gill said on the call.
  • Loans to small and mid-sized businesses are up 8% quarter-on-quarter.
  • Some employees exercised stock options but this is not seen as a conflict to their company loyalty.
  • Company needs to reshape loan book with a focus on retail segment.
  • The RBI and government are not keen that the lender be merged.

Analyst Views

  • ”We need lot more clarity on timing/quantum of capital raise and also the movement in their stress book,” Citigroup Inc. analysts Manish Shukla wrote in a note after the Yes bank’s conference call ended. He said the bank will give further clarity with second-quarter results and maintained a sell rating on the stock.
  • “The call has allayed some of the concerns on Yes Bank and its stock is trading at a third of its book value,” said Sameer Kalra, founder of Mumbai-based advisory firm Target Investing. “This can be the final stage of a clean-up if slippages and provisions stabilize.”

--With assistance from Hemal Savai, Rahul Satija and Abhishek Vishnoi.

To contact the reporters on this story: Nupur Acharya in MUMBAI at nacharya7@bloomberg.net;Suvashree Ghosh in Mumbai at sghosh186@bloomberg.net

To contact the editors responsible for this story: Lianting Tu at ltu4@bloomberg.net, Teo Chian Wei

©2019 Bloomberg L.P.