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Home / Companies / News /  Yes Bank stock’s inclusion in indices under threat amid plunge in market cap

The unremitting selling pressure on shares of Yes Bank Ltd has put a question mark on the scrip’s continuing presence in the benchmark indices. A more than 22% drop in the stock on Tuesday sank the company’s market capitalization to around 8,160 crore, the lowest in the Sensex and Nifty 50.

Yes Bank was included in Nifty in March 2015. The criteria for selecting a particular stock in the index is: the security should have traded at an average impact cost of 0.50% or less during the last six months for 90% of the observations for a portfolio of 10 crore, and the average free-float market capitalization should be at least 1.5 times the average free-float market capitalization of the smallest constituent in the index.

With the fall in market cap, Yes Bank satisfies only the volume criteria: it had the highest traded quantity of 56.08 million shares and a total turnover of 206.77 crore as of Tuesday. This puts both the stock exchanges in a piquant position.

The stock was down for the fifth straight session on Tuesday, with 4,828.94 crore worth of market cap eroded during the period. Since the start of the year, the stock has lost 82.39% while the Sensex has gained 6.20% and Nifty 4.58%.

Analysts tracking Yes Bank have currently recommended eight buys, 16 holds and 19 sells, in contrast to 28 buys, 10 holds and seven sells at the start of the year, according to Bloomberg.

On Monday, the stock tumbled 15% amid concerns over its exposure to Indiabulls Housing Finance Ltd. Its 23% plunge on Tuesday was due to the sale of 100 million shares, representing 3.92% of the bank’s equity capital.

In a filing to the exchanges on Wednesday, the bank said a large stakeholder invoked shares pledged with it, following which the entire pledge stood extinguished.

Over the past few weeks, employees of Yes Bank have sold shares worth at least 38.45 crore, even as the bank’s top management has been attempting to attract fresh capital.

Between 25 July and 27 September, Yes Bank’s co-founder Rana Kapoor’s promoter group companies, Morgan Credits Pvt. Ltd and Yes Capital (India) Pvt. Ltd, along with employees, including 10 senior Yes Bank officials, have off-loaded shares worth at least 730.97 crore in the market, according to regulatory filings.

In a bid to allay investor concerns, Yes Bank said in exchange filings on Wednesday it has liquidity coverage ratio in excess of 125% as of 30 September, above the minimum regulatory requirement of 100%.

Gross advances aggregated to 2.32 trillion as of 30 September compared with 2.42 trillion as of 30 June, with a higher share of retail advances. The reduction in advances was effected to enhance capital efficiency. Deposits aggregated to 2.09 trillion as of 30 September, while CASA ratio improved to 30.8% from 30.2% as of 30 June.

Yes Bank raised 1,930 crore in August through a qualified institutional placement, which effectively made the bank sell almost a 10% stake to a clutch of asset management companies.

The bank desperately needs to raise fresh capital to improve its common equity tier-1 (CET-1) ratio adequately above the statutory requirement of 7.375%.

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