Shares of Yes Bank rallied 11% to ₹16.25 apiece on Thursday’s early trade. The shares hit a new 52 week high after CARE Ratings upgraded the lender’s credit rating for its infrastructure bonds worth ₹5000 crores from ‘BBB’ to ‘BBB’ plus.
Its lower Tier II Bonds and Tier II Bonds (Base III) too have received a similar upgrade from the agency. The rating for Upper Tier II bonds has been revised to ‘BB+’ with a positive outlook.
The stock has rallied 33% in the month of April and the private lender has been in demand among investors so far in the new financial year. In the past week, the share has rallied 25.31%. This means that if an investor would have invested ₹1,00,000 in the shares a week ago, the value of their holdings would have been ₹1,25,310 today!
“The revision in ratings assigned to the debt instruments of Yes Bank factors in the bank’s continued demonstration of stabilisation of operations and growth in business i.e. advances as well as deposits, with strong growth in CASA deposits and continued improvement in profitability during 9MFY22 with stable asset quality parameters amidst concerns over Covid-19 related stress,” said CARE ratings, highlighting the rationale behind the rating upgrade.
“The bank expects the recovery to be higher than the expected slippages in the near term, however, the proportion of stressed advances to the net worth remained relatively higher for the bank and higher than expected slippages may further impact the financial risk profile of the bank and would continue to remain a key monitorable,” CARE Ratings added.
Yes Bank’s net advances grew by 8.8% from ₹1,66,893 crores in 2021 to ₹1,81,508 crores for the fiscal year ended March 31, 2022.
“Technically, such sharp up moves post larger range movements indicate sharp upside ahead. Hence, a sustainable up move above Rs 15-50-16 levels could open a potential upside pattern target of around Rs 19.50- Rs 20 levels. We expect these upside targets to be achieved in the next 1 or 2 months. At reaching the highs, the stock price is expected to encounter strong resistance around Rs 20 and is likely to shift into a downward correction from the highs,” said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.
Nilesh Jain of Centrum Broking said that Yes Bank has given a fresh breakout from its falling trend line with higher than average volumes. The stock surpassed all short-term and long-term moving averages and the momentum indicators and oscillators have also given a fresh crossover on the daily chart.
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