Yes Bank's share price jumped as much as 2.4% and crossed the Rs 21 mark on Wednesday, June 4, a huge rebound from its nearly 11% crash yesterday. The major reason for the return of bulls in Yes Bank is the fundraising plan of Rs 16,000 crore announced in a board meeting. What will impact Yes Bank shares ahead?
Yes Bank Share Price Jumped On June 4:
At the time of writing, Yes Bank share price traded at Rs 21.01 apiece, up nearly 1% on BSE, with market cap of Rs 65,920.48 crore. The stock gained nearly 1.9% to hit an intraday high of Rs 21.24 apiece on BSE in the early trade.
At the opening bell, around 09:15 AM, about 1 million and 500K shares exchanged hands at a share price of Rs 21.2 and Rs 21 respectively. Another 500K shares were exchanged at 9:18 AM at Rs 20.98.
Investors cheered in Yes Bank shares after its strong fundraising announcement.
Yes Bank Fundraising Of Rs 16,000 Crore:
In a board meeting held on June 3, approval was granted to raise Rs 16,000 crore through capital market instruments for diluting at 20% stake in Yes Bank. The fundraising plan is in two tranches.
1. Firstly, Yes Bank will raise about Rs 7,500 crore through issuance of eligible equity securities through various permissible means.
It said, this shall not result in an aggregate dilution of more than 10% (including dilution on account of issuance of equity securities in terms of this item and conversion of any convertible debt securities approved by the Board).
2. Secondly, Yes Bank will raise about Rs 8,500 crore through issuance of eligible debt securities in Indian or foreign currency.
Also, this shall shall not result in an aggregate dilution of more than 10% (including dilution on account of conversion of convertible debt securities in terms of this item and any other issuance of equity securities as approved by the Board), in one or more tranches and/or series, in domestic and /or overseas market.
Further, Yes Bank announced that the agreement has been amended between SMBC, SBI and Yes Bank. The new amendments that is added in the share purchase agreement are:
1. Subject to the applicable Laws, Sumitomo Mitsui Banking Corporation shall have a prorata pre-emptive right to subscribe to such number of equity securities being issued by the Company in order to maintain its proportionate shareholding in the Company, in accordance with the terms of SMBC SHA.
2. Sumitomo Mitsui Banking Corporation or any of its permitted assignees (in terms of the SMBC SHA) shall have the right to nominate 2 (two) Non-Executive and NonIndependent Directors ("SMBC Nominee Directors") for appointment on the Board of Yes Bank.
Removal / replacement of the SMBC Nominee Director or any other right / obligation with respect to the SMBC Nominee Director shall be in accordance with the terms of the SMBC SHA. Any provision regarding share qualification, shall not apply to such person(s) nominated to act as SMBC Nominee Directors.
3. State Bank of India shall have the right to nominate 1 (one) Non-Executive and Non-Independent Director ("SBI Nominee Director") for appointment on the Board of Yes Bank.
4. No meeting of the Board shall be convened at a shorter notice unless agreed to in writing by: (a) any 1 (one) of the SMBC Nominee Director(s); and (b) the SBI Nominee Director. Every such shorter notice board meeting shall set out the agenda, and all the documents/information, as may be necessary to review and discuss the agenda.
Why Yes Bank Shares Crashed On June 3?
After falling by nearly 11%, Yes Bank share price closed at Rs 20.85 apiece on June 3, down by 10.40%.
The crash followed after Yes Bank clarified over media reports that claimed of SMBC seeking RBI license to operate wholly-owned arm, which was reportedly part of the stake agreement in Yes Bank.
Yes Bank clarified to exchanges saying, "In this regard, the Bank is not privy to discussions in relation to matters stated in the article. Further, references to the Bank having 'road map' discussions with the RBI are factually incorrect."
According to SAMCO Securities, on June 3, Yes issued a clarification that it was not involved in any such discussions and that parts of the news were factually correct. This statement cooled investors enthusiasm, as it indicated that the takeover or partnership rumours might have been baseless.
On May 9th, a share purchase agreement was signed between SBI, SMBC, and Yes Bank.
Under the SPA, SMBC has agreed to acquire 4,134,404,897 equity shares representing 13.19% of the equity share capital of the Bank from SBI, subject to satisfaction of customary conditions precedent (including, but not limited to, receipt of approval from the Reserve Bank of India ("RBI") and Competition Commission of India ("CCI")).
Yes Bank also signed agreement with other bankers like HDFC, ICICI, Kotak Mahindra, Axis, IDFC First, Federal and Bandhan collectively to sell 2,136,830,297 equity shares representing 6.81% of the equity share capital.
BUY/SELL Yes Bank shares?
According to SAMCO, Yes Bank's support and resistance is around Rs 20 and Rs 23.39. The long term trend decider is 200-Day MA of Rs 19.99.
SAMCO's report cited expert recommendations. For short term traders, the range-bound strategy in Yes Bank is Rs 20-Rs 23) with tight stop-losses. For long term investors, the recommendation is to ACCUMULATE below Rs 19, if fundamentals improve.
On the contrary, as per Trendlyne data, the consensus recommendation from 12 analysts for YES Bank Ltd. is SELL. The 1-year average target price in Yes Bank is of Rs 16.45, signalling nearly 22% potential decline.
Disclaimer: The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.
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