YES Bank shares fell 1.15 per cent on Thursday, hitting a new 52-week low of Rs 15.44. The stock dropped 25.89 per cent in a month after the Supreme Court dismissed appeals regarding the Rs 8,415 crore AT1 bonds. Experts said the ruling could significantly impact profitability and future capital ratios.
Shares of YES Bank Ltd fell 1.15 per cent in Thursday's trade to hit a fresh 52-week low of Rs 15.44. The stock was last trading 0.96 per cent lower at Rs 15.47, taking its one-month decline to 25.89 per cent.
The selling pressure followed the Supreme Court's dismissal of appeals filed by YES Bank, the Reserve Bank of India (RBI) and the Centre against a Bombay High Court ruling that quashed the March 2020 write-off of the lender's Rs 8,415-crore Additional Tier 1 (AT1) bonds.
"In this regard, the Bank would like to submit that the Hon'ble Supreme Court has upheld the judgment dated January 20, 2023, passed by the Hon’ble Bombay High Court and consequently dismissed the appeals filed by the Bank, Reserve Bank of India and Union of India," YES Bank said in an exchange filing.
The bank added that it was examining the judgment in detail, including evaluating available legal options and determining appropriate steps going forward.
YES Bank, in which Japan's Sumitomo Mitsui Banking Corporation holds a 24.9 per cent stake, was declared insolvent six years ago. Under a restructuring scheme, new investors were brought in, and its AT1 bonds were written off.
AT1 bonds
AT1 bonds are high-risk debt instruments that typically offer higher returns but can be written off or converted into equity under specified circumstances when a bank faces financial stress.
Bondholders challenged YES Bank's write-off, following which the Bombay HC ruled in their favour in January 2023. The Supreme Court has now upheld that ruling.
Q2 earnings
YES Bank reported a 22.7 per cent year-on-year (YoY) increase in net interest income (NII) to Rs 2,822 crore in Q2 FY27. Net profit rose 65 per cent YoY to Rs 1,080 crore.
"The second-quarter earnings were positive. However, the Supreme Court's decision overturning the Rs 8,415 crore AT1 bond write-off could significantly impact profitability and capital ratios. Investors should avoid fresh positions amid legal and financial uncertainty," said Ravi Singh, Chief Research Officer at Master Capital Services.
From a technical perspective, Shitij Gandhi, AVP - Equity Technical Research at SMC Global Securities, said support for the stock had shifted to Rs 15, followed by Rs 14.
Any recovery could face selling pressure unless the stock decisively reclaims the Rs 20-21 zone, Gandhi added.