Yes Bank Surges 7% as It Initiates Sale of Stressed Assets Worth Rs 4,234 Crore to Address NPAs

Yes Bank witnessed a surge of 7 percent in its stock, reaching a day's high of Rs 21.68 per share on December 12, driven by the private sector lender's initiative to seek buyers for its corporate and retail loans with an outstanding debt of Rs 4,234 crore. The bank has invited expressions of interest (EoI) for the proposed sale of non-performing assets (NPAs), with bids sought to determine the anchor bid for the stressed assets sale, all to be offered on an upfront 100 percent cash basis. The move comes as Yes Bank aims to address NPAs accumulated between September 2019 and June 2022, including those from companies like Katerra India, Indrajit Power, ATS Realworth, and others.

The stock's notable performance in the past month, with a surge of over 17 percent, outpacing the benchmark Sensex's 7 percent rise, suggests investor confidence in Yes Bank's strategic measures to address its non-performing assets. The bank's invitation for bids for the sale of stressed loans, scheduled to conclude by December 18, indicates a proactive approach to managing its asset quality and optimizing its balance sheet.

As of September 2023, Yes Bank reported gross NPAs of Rs 4,319 crore, encompassing various sectors such as corporate banking, mid-corporate, SME, and retail. The move to sell stressed assets aligns with the bank's efforts to strengthen its financial position and enhance overall asset quality. While the bank's net profit for the July-September quarter witnessed a robust 47.4 percent YoY growth, analysts at Kotak Institutional Equities have maintained a 'reduce' rating, citing concerns about the bank's weak return on equity (RoE) at 2 percent and a path to normalized RoE versus peers that appears to be a few years away.