Yes Bank Shares Plunge 7% Amid Reports of 3% Equity Change

Yes Bank’s shares experienced a significant drop of 7.4%, falling to Rs 21.55 during early trading on Tuesday. This decline followed reports of 3% of the bank’s equity changing hands through multiple block deals. The private lender’s stock is under scrutiny as its board prepares to discuss potential fundraising strategies. Notably, the stock had previously surged over 8% on Monday, making it one of the top performers in the Nifty 500 index.

Market Activity and Share Performance

Yes Bank’s stock price took a hit early Tuesday, dropping 7.4% to Rs 21.55. This decline came after reports indicated that 3% of the bank’s equity was traded through several block deals. According to CNBC TV-18, a private equity investor is likely behind these transactions, although details about the buyer and the specifics of the deals remain undisclosed. The bank’s shares had shown a robust performance the previous day, climbing over 8% and ranking as the third-best performer in the Nifty 500 index. This surge was attributed to speculation surrounding Sumitomo Mitsui Banking Corporation’s (SMBC) interest in establishing a wholly-owned subsidiary in India, which some analysts believe could lead to SMBC acquiring a controlling stake in Yes Bank.

Board Meeting and Fundraising Initiatives

As Yes Bank’s stock faces volatility, the bank’s board is set to meet to explore various fundraising options. These discussions will include the potential issuance of equity shares, debt instruments, or other securities through methods such as private placements or preferential issues. The bank has stated that it will operate within legal parameters while considering these options. On Monday, Yes Bank publicly denied any knowledge of ongoing discussions regarding a “road map” with the Reserve Bank of India (RBI), emphasizing that it is not engaged in any negotiations related to the reported interest from SMBC.

Future Outlook and Analyst Ratings

Looking ahead, analysts have mixed views on Yes Bank’s stock. According to Trendlyne data, the average target price for Yes Bank shares is set at Rs 16, suggesting a potential decline of 29% from current levels. A consensus rating from 12 market analysts indicates a ‘Sell’ recommendation for the stock. On Monday, Yes Bank shares closed at Rs 23.27 on the Bombay Stock Exchange, reflecting an increase of 8.4%, while the broader Sensex index fell by 0.09%. Over the past three months, Yes Bank’s shares have seen a 39% increase, and the company’s market capitalization currently stands at Rs 72,976 crore.

Recent Developments and Market Context

In May, SMBC expressed intentions to acquire a 20% stake in Yes Bank from a consortium led by the State Bank of India, which had previously supported the bank during its financial difficulties in 2020. This transaction would value Yes Bank at over $8 billion. The recent fluctuations in Yes Bank’s stock price highlight the ongoing uncertainties in the market and the potential implications of strategic decisions made by the bank’s leadership. As the board prepares for its meeting, investors and analysts alike will be closely monitoring developments that could impact the bank’s future trajectory.

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