Shares of Yes Bank jumped 8.5% to Rs 22.75 in Thursday’s trade on BSE amid reports that the private lender is looking for a new promoter.
According to a report by Livemint, the bank is considering selling up to 51% of its stake, aiming for a target valuation ranging between $8-9 billion. This marks a notable increase from its current market capitalization of $7.2 billion. Citigroup’s India unit has been enlisted to facilitate the search for a potential buyer.
Yes Bank has extended invitations to several Indian lenders, including existing shareholders, to partake in this endeavour. The bank has initiated discussions with banks and financial institutions in Japan, West Asia, and Europe for the sale of at least 51% stake in Yes Bank. However, under central bank regulations, any new promoter holding more than a 26% stake will require special approval from the Reserve Bank of India (RBI).
The potential stake sale stands to provide an exit for key shareholders like State Bank of India (SBI), Life Insurance Corporation of India (LIC), HDFC Bank, and ICICI Bank, which had intervened to rescue Yes Bank in 2020 when it was facing collapse under its previous management.
However, Yes Bank clarified that reports of gains on lender seeking new promoter are speculative.
At 1:22 pm, the scrip was trading 7.2% higher at Rs 22.4 on BSE. The stock has also rallied nearly 50% in the last one year, however, it has declined nearly 20% in the past one month.
As per Trendlyne data, the average target price of the stock is Rs 16, which shows a downside of 30% from the current market prices. The consensus recommendation from 12 analysts for the stock is a ‘Strong Sell’.
In terms of technicals, the relative strength index (RSI) of Yes Bank stands at 31.7, signaling it’s neither trading in the overbought nor in the oversold territory. The stock has a beta of 1.1, indicating high volatility in a year.
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