Source:- Business Top 5: Yes Bank stock crashes 13% after UBS downgrades it to ‘sell’ with target price of Rs 90
Earlier, on 11th June’19, NMDC had stopped production at all its mines in Bailadila following protest from locals. The miner had suspended mining at Bailadila Complex consisting of Bacheli and Kirandul mining blocks in Chhattisgarh due to agitation from locals against mining in Deposit 13 which is supposed to house their deity.
The mining was halted at Kirandul on 7th June and at Bacheli on 11th June. NMDC had earlier announced development of its 10 MnT Iron Ore Deposit-13 in Chhattisgarh through a joint venture of NMDC-CMDC (or NCL), However, the JV Company NCL is only restricted to selling of the iron ore from the deposit while the contract of excavation and mine development has been awarded to Adani Enterprises through transparent reverse bidding process. As per the local’s report, the mine area is supposed to be house their deity.Donimalai mines in Karnataka remains suspended since Nov’18 due to state government’s decision to impose 80% premium on the iron ore sales from the mine
3. INDUSIND BANK DOWNGRADED
IndusInd Bank continued the declining momentum, with falling >6% in last 2 days. Today’s decline of 5% was on back of a negative brokerage note by UBS wherein they highlighted their concerns about higher than expected lending by IndusInd to non-investment grade companies. Also, the credit costs are likely to exceed current expectations. Moreover, retail deposits, as a percentage of external liabilities for IndusInd, is lowest among banks in their coverage at around 20%, which is a structural issue and often manifests in credit quality surprises. As a result UBS downgraded the stock to Sell on unfavourable risk-reward with a revision in price target to Rs. 1,400/ share from Rs. 1700/ share
However, they also believe that proposed Bharat Financial merger to boost FY20 PBT/earnings by around 25/8.5% on a pro-forma basis. But at the same time, slowing vehicle sales are likely to curtail loan growth (ex-BHAFIN) to 20% CAGR in FY19-21. The stock remained among the top Nifty loser along with Yes Bank with traded volumes at ~2x last 5-day average
4. JET CRASH LANDS
Shares of Jet Airways plunged 23% intra-day as stock exchanges announced trading restrictions on the troubled airline. NSE notified that the shares of the airline will be shifted from “Rolling Segment to Trade for Trade Segment, wherein the settlement in the scrip will take place on gross basis with 100% upfront margin and 5% price band”. Moreover, it will be removed from F&O segment from June 28 as the stock has eroded 68% value this year compared to NIFTY’s ~10% gain YTD. The stock ended at lowest point in its history as reports indicated that Hindujas’ negotiations with Etihad had stalled as the Gulf-carrier shelved plans to increase investment to resurrect Jet. With AdiGroup as the only unsolicited bidder and interested party in reviving Jet via partnership with Etihad, most on the street see end of the runway near as AdiGroup will only wait for 48 hours before walking away.
5. YES BANK TUMBLES
YES BANK Stock tumbled in trade (down 13% ) as brokerage house UBS downgraded the stock to sell with a TP of Rs 90 per share. UBS believes that expectations of sharp turnaround are unlikely to fructify soon and believes that credit costs could rise higher than management guidance.
In an exclusive interview with Nikunj Dalmia, Managing Editor at ET NOW, MD & CEO Ravneet Gill clarified on host of investor concerns. Talking about the recent two resignations he said the timing was just coincidental & one of the member resigned for personal reasons. He mentioned that R Gandhi’s appointment by RBI as additional director is a positive development for the bank.
Responding to recent concerns by Moody’s and UBS brokerage, Mr. Gill said that he is confident of maintaining credit cost guidance at 125 bps for FY20. He said they are seeing some progress in the NBFC book exposure like stake sales & getting in investors and clarified that yes bank’s exposure to NBFC sector is current as of now.
On capital raising, Mr. Gill clarified that they have received interest from several private equity players to infuse capital in bank and that price of capital dilution is always an important consideration. Being optimistic about the future of the bank he said the bank will be more focused on growth in H2 & growth will come back once capital is raised.