Shares of YES Bank fell nearly 4% to the day’s low of Rs 25.25 on Monday, extending their losses to the second straight session and falling over 7% following last week’s downgrade by Goldman Sachs, where it issued a ‘Sell’ rating.
The development comes ahead of YES Bank’s analyst meeting with Jefferies India and Artisan Partners on Thursday.
In its stock review note, the US-based brokerage said the Goldilocks period is over for the financial sector as it downgraded two other banks — State Bank of India (SBI) and ICICI Bank. But when it comes to HDFC Bank, it sees a 33% upside.
On Monday, around 10:10 am, the stock was trading amid high volumes with over 9.54 crore shares trading on the NSE. The traded value of the shares stood at Rs 2,437.29 crore.
Goldman Sachs had cited three major headwinds for financials — rising pressure on the cost of funds due to structural challenges in the funding environment, growing concerns on rising consumer leverage and pressure on operating costs.
“We are cutting earnings estimates across our coverage universe by 5%/2% on average over FY25/26 and are below VA consensus on aggregate PAT by 2%/1% for FY25/26. However, for select names we are lower by mid-to-high single digits,” Goldman said.
Among private banks, it has buy calls on HDFC Bank, Kotak Bank, Axis Bank, IndusInd Bank and Bandhan Bank.
“Given most of the large and mid-sized private banks are trading in a close valuation band, we believe visibility on loan growth, PPOP-ROA and credit quality will play an important role. We noticed that the asset quality worsened for many private banks on account of the normalisation of the credit cycle. However, given that select private banks have aggressively grown their unsecured loans and witnessed an expansion of margins, we believe that as consumer lending goes through a slowdown, unit economics and growth could be a challenge,” Goldman said.
Yes Bank shares have rallied nearly 55% in the last 12 months, which is double the returns delivered by Nifty during this period and nearly four times over the sectoral Nifty Bank index.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
