The share price of a large-cap banking stock rallied 9.5 percent on Monday’s early trades to reach an intraday high of ₹ 19.00 apiece after a two-year-long tussle ended. The stock has gained more than 13 percent in the past two days. At 02:46 PM, its shares were trading at ₹ 18.55 apiece.
Analysts attribute the rally in the share price of Yes Bank to media reports hinting at a potential resolution between the Subhash Chandra-led Essel Group and JC Flower Asset Reconstruction Company— Yes Bank’s asset restructuring arm.
Reportedly, JC Flower ARC has agreed to solve the dispute by accepting a substantial reduction on the ₹ 6,500 crore loan. As a result, Subhash Chandra is expected to pay ₹ 1,500 crore instead of the originally contested ₹ 6,500 crore.
JC Flowers ARC had obtained assets from Yes Bank at a discounted rate, forming a part of Yes Bank’s transfer of a non-performing assets (NPA) portfolio worth ₹ 48,000 crore to the ARC for slightly over ₹ 11,183 crore in December 2022. Essel Group subsidiary Zee Learn had earlier signalled its intention to resolve issues with JC Flowers ARC.
Analysts say that it is quite early to conclude if the worst is over but the resolution of the debt tussle definitely bodes well for the beleaguered lender. This has led to sentimental optimism and buying interest on the counter. They are asking investors to maintain caution as there was no official confirmation regarding this resolution.
Meanwhile, the shares of Dish TV and Zee Entertainment were in the green. With this payment, Subhash Chandra will be able to regain control over the family’s stake in assets including Dish TV, Zee Learn, and three properties, among them a central Delhi bungalow, according to the reports.
Yes Bank Ltd is engaged in providing a wide range of banking and financial services. With a market capitalization of ₹ 49,864 crores, Yes Bank is a large-cap company. It has a low return on equity of 1.22 percent. Its shares were trading at a price-to-earnings ratio (P/E) of 64.22, which is significantly higher than the industry P/E of 13.97, indicating that the stock might be overvalued as compared to its peers.
Retail investors hold a 38.50 percent stake in the company, followed by domestic institutions with 37.55 percent, foreign institutions with 23.79 percent and mutual funds with 0.16 percent.
Written by Simran Bafna
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The post Large Cap Stock Jumps up to 10% following the resolution of a two-year debt dispute worth ₹ 6,500 Cr appeared first on Trade Brains.
