Yes Bank share price rallies 10% on rating upgrade; stock zooms over 240% in 9 months

Yes Bank share price surged 10 per cent to hit upper circuit of Rs 19.05 apiece today on BSE, a day after the bank informed that Brickwork Ratings has upgraded its bond’s rating. Brickworks upgraded the rating of Yes Bank’s Tier I Subordinated Perpetual Bonds (Basel II) to BWR BB+/ stable from BWR D. Yes Bank shares were trading at their highest level in four and a half months. Today’s trading level was last seen on July 22, 2020. The stock has skyrocketed 243 per cent from its 52-week low of Rs 5.55 apiece touched in March this year. “The rating upgrade factors in improvement in capitalisation ratios of the bank, strong shareholder base and experienced board members,” Brickwork Ratings said.

The Reserve Bank of India (RBI) had superseded the Board of Directors of the bank in March this year and imposed a 30-day moratorium on the bank. “The bank has a strong shareholder base with State Bank of India holding 30% stake as on 30 September 2020 and the bank has an experienced board of directors with Prashant Kumar as the managing director and chief executive officer (MD & CEO),” it added.

The rating is however constrained by the weak asset quality, impacting the profitability and moderate resource profile of the bank, it said. “The ability of the bank to control slippages on account of COVID-19 related stress is a key monitorable. The ability of the bank to maintain a retail and sustainable deposit base is a key monitorable,” Brickwork Ratings said in the rating action.

In the last one month, Yes Bank shares have rallied 47.6 per cent as compared to an 8 per cent rise in S&P BSE Sensex. Last month, CARE Ratings had upgraded ratings on its various debt instruments following improvement in the bank’s credit profile after the reconstruction plan. It had revised the rating on Rs 5,000 crore infrastructure bonds from CARE B to BBB and removed the bonds from ‘under credit watch’ with developing implications, with a stable outlook.