Yes Bank shares face further downside risks after the Supreme Court overturned the lender's Rs 8,415-crore AT-1 bond write-off. Citi cut its target price to Rs 17.50 and kept a 'Sell' rating. The brokerage said the ruling could weaken the bank's capital position and force it to raise more money.

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Yes Bank shares face further downside risks after the Supreme Court overturned the lender's Rs 8,415-crore additional tier-1 (AT-1) bond write-off, prompting global brokerage Citi to cut its target price and warn of a substantial erosion in the bank's capital buffers. The brokerage has maintained its 'Sell' rating on Yes Bank stock and lowered its target price to Rs 17.50 per share from Rs 22 earlier.

The revised target implies a further downside of 3.4 percent from Thursday's closing price of Rs 18.12. Yes Bank shares had plunged 14.53 percent on October 15 following the Supreme Court's ruling, which upheld the Bombay High Court's decision to invalidate the AT-1 bond write-down carried out during the lender's restructuring in March 2020.

The stock has declined 15.7 percent so far in 2026, underperforming the Nifty 50, which has fallen 12 percent over the same period. Yes Bank's market capitalisation stood at Rs 56,877 crore at Thursday's close.

Why Citi sees further risks for Yes Bank stock

Citi warned that the Supreme Court's decision could significantly weaken Yes Bank's capital position, as the lender may now have to recognise the Rs 8,415 crore worth of AT-1 bonds that were previously written off.

According to the brokerage, the reversal could reduce Yes Bank's Common Equity Tier-1 (CET-1) capital ratio by approximately 250 basis points, bringing it down to around 11.5 percent. This estimate excludes the additional impact of coupon payments on the outstanding bonds.

CET-1 is a key measure of a bank's financial strength, reflecting its highest-quality capital available to absorb losses. A decline in this ratio would reduce Yes Bank's capital cushion and potentially constrain its ability to support future growth.

Citi also estimated that the financial impact of the ruling could erode Yes Bank's book value by 13-14 percent. The brokerage cautioned that the lender may need to raise additional capital to restore its capital buffers, adding another layer of uncertainty to the stock's outlook.

On October 15, the Supreme Court upheld the Bombay High Court's ruling quashing Yes Bank's Rs 8,415-crore AT-1 bond write-off, holding that the bank's administrator lacked the authority to do so. The ruling leaves the bonds outstanding, potentially exposing the lender to repayment and interest liabilities.

Yes Bank examining judgment and its implications

Following the Supreme Court's decision, Yes Bank said it was examining the judgment and assessing its implications. "The bank is in the process of obtaining and examining the final order copy of the judgment and its implications and will make such further disclosure as may be required," the lender said in a stock exchange filing on October 15.

The judgment also introduces uncertainty over the financial implications for Yes Bank's largest shareholder, Japan's Sumitomo Mitsui Banking Corporation (SMBC). SMBC agreed to acquire a 20 percent stake in Yes Bank in May 2025, while the Reserve Bank of India subsequently approved an increase in its holding to as much as 24.99 percent. The Japanese financial institution's total investment in the lender is estimated at around Rs 17,000 crore.