YES Bank most volatile bank stock in 2018
This year, the stock touched a 52-week high of Rs 404 on August 20 and a low Rs 166.15 on September 28 on BSE
YES Bank's shares remained one of the most volatile stocks in the banking sphere in 2018.
On Thursday, the shares plunged 7.42% after its non-executive independent chairman Ashok Chawla tendered his resignation the previous day.
On Wednesday late evening, YES Bank in a regulatory filing said Chawla has resigned with immediate effect as he felt the bank would need a chairman who could devote more time and attention during this transition period when its managing director and chief executive Rana Kapoor is on his way out after the Reserve Bank of India refused to give him an extension.
In another regulatory filing on Wednesday, the bank said its another independent director Vasant Gujarati has also resigned with immediate effect due to personal commitments. Gujarati was the chairman of the bank's audit committee. He was replaced by Uttam Prakash Agarwal, former president of Institute of Chartered Accountants of India. YES bank's Board has approved Agarwal as an additional independent director and subsequently as an independent director for a period of five years, subject to shareholders' approval.
On Thursday, the stock opened at Rs 215 and touched a high of Rs 218 and a low of Rs 202.30 before closing at Rs 206 per scrip. The share price has been on a downward move since September 21 after RBI refused to grant an extension to Kapoor to continue as MD and CEO. His term will come to an end on January 31, 2019. On September 21, Yes Bank share closed at Rs 227.05 apiece, 28.71% lower than its previous close.
This year, the stock touched a 52-week high of Rs 404 on August 20 and a low Rs 166.15 on September 28 on BSE.
The bank made a plea with the RBI to extend Kapoor's term till at least April 2019 but it was rejected by the central bank. RBI, on the other hand, has asked YES Bank to ensure that a replacement is in place from February 1, 2019. At a time when the private lender is struggling to find Kapoor's replacement, it now has to look to fill the position of the chairman as well.
In Wednesday's regulatory filing, the bank said that it shall in due course announce the appointment of a chairman, post RBI's approval.
The bank has also recently reported a divergence of Rs 6,355 crore in its gross non-performing assets (NPA) for FY2017 after another private lender Axis Bank also reported divergence in its bad loans.
Divergence is the difference in the numbers between the RBI's inspection report and bank's own report.
In FY2017, YES Bank had reported gross NPAs of Rs 2,018.6 crore as against RBI's assessment of Rs 8,373.8 crore during the same period.
Rahul Shah, VP - equity advisory group, Motilal Oswal Financial Services, said the stock has been falling due to the uncertainty over succession issue post Rana Kapoor. The bank's earnings are good, the business is robust and there are unlikely to be any challenges in terms of business, he said. "I think there would be no more downside, may be 5-10% on a bad market," Shah said.
The current reactions seen on the bank stock including the 7.42% fall, according to Shah, are mostly based on panic and speculations. The investors who were jittery of the stock have already sold and exited, he said.
Shah also said YES Bank is one of the most volatile stocks in the banking space since January. "Other bank stocks have also fallen, but none has been as volatile as YES Bank," he said, adding that post January-March quarter results, the stock fell to sub-Rs 300-level and then moved to Rs 400-level and again fell to Rs 200-odd level. Since January, the stock fell over 34% till date.
Shah, however, expects this volatility to get reduced as the stock is likely to get normalised.