InvestorQ : What is the reason for the Yes Bank stock appreciating rapidly in the last few weeks and is it sustainable?
Aashna Tripathi made post

What is the reason for the Yes Bank stock appreciating rapidly in the last few weeks and is it sustainable?

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Tisha Malhotra answered.
2 years ago
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Yes Bank has been appreciating for quite some time now and the rally continued on Friday also. In fact, the shares got a fresh lease after some brokerages also gave a buy call on the stock and even upgraded the target price on the stock. At a price of around Rs.72, the stock has almost doubled since the last one month

The board of the bank also met on Friday to consider and approve raising of funds by issue of equity, equity linked securities. To shore up its capital base, Yes Bank proposes to raise close to $1.2 billion in capital. The stock price also rallied after it got expression of interest from HDFC Mutual Fund and some Canadian family offices.

Capital is the big worry for Yes Bank. Over the last few quarters, the exposure to several troubled shadow banks, real estate firms and stressed companies resulted in Yes Bank’s bad loans rising sharply. In addition, the RBI had pulled up Yes Bank on divergence and that had forced Yes Bank to step up its provisioning for bad loans. As a result, Yes Bank’s core equity capital stands at just 8.70%, marginally above the regulatory minimum of about 8%. Unless this is shored up with equity support, the bank would find it hard to grow.

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