The Yes Bank share price pulled back this week, despite the company publishing strong results and Japan’s SMFG continuing its stock purchases. It retreated for the fourth consecutive day, reaching a low of ₹20.10, down by nearly 15% from its highest point in June. 

SMFG to buy more Yes Bank shares

The Yes Bank stock price has remained under pressure, even after Sumitomo Mitsui Financial Group (SMFG) hinted that it would buy more shares. 

According to Bloomberg, the company is considering acquiring an additional 5% stake in the company. If it does that, it will acquire the stake from Carlyle, the giant American private equity company. 

SMFG already owns 20% of Yes Bank, which it acquired in a $1.6 billion deal in May this year. It may also consider buying its convertible bonds worth $680 million, which Yes Bank hopes will help it grow its business. 

SMFG’s investment in Yes Bank is a bullish sign for the company, as it demonstrates confidence in the bank’s continued success. 

The investment comes at a time when dealmaking in India is accelerating as the country’s economy jumps. For example, SMFC recently acquired Fullerton India Credit, a company that provides car and house loans. M&A deals have jumped to $31 billion this year.

Growth continues

Yes Bank has been in the spotlight in recent years as the company implemented its turnaround strategy following a near-bankruptcy in 2020. This happened afer the company’s non-performing loans jumped.

As part of its rescue plan, other large banks like the State Bank of India (SBI), HFC, Axis Bank, ICICI Bank, Bandhan Bank, and Kotak Mahindra invested in the company. 

The RBI also announced a ₹60,000 crore to ensure that it would meet depositor demand. This intervention helped to prevent the collapse of India’s banking sector. 

The most recent results showed that the company’s business was doing well. Its profit after tax (PAT) jumped by 54% in the last quarter to ₹801 crores, marking the seventh consecutive quarter of profit growth. 

The net interest margin remained flat at 2.5%, while the non-interest income came in at ₹1,752 crores, up by 46% from a year earlier. 

Yes Bank has also continued to improve its balance sheet, which helped it get a better credit rating. Moody’s upgraded its long-term rating to Ba2 and its outlook to stable. Other agencies, such as CARE and ICRA, also upgraded their outlooks. In a statement, the management said:

 “The Bank entered the new financial year on a strong footing and delivered a robust performance with net profit rising to INR 801 crs, marking a 59.4% YoY growth. Key metrics such as RoA (0.8%), PPoP (INR1,358 crs), and NIM (2.5%) showed notable improvement.”

Yes Bank share price analysis

Yes Bank stock chart | Source: TradingView The daily chart shows that the Yes Bank stock price has come under pressure in the past few weeks. It dropped from a high of ₹23.37 on June 2nd to ₹20 today. 

The stock is consolidating at the 50-day and 100-day moving averages. It also remains above the ascending trendline that connects the lowest swings since April 7. 

Therefore, the stock will likely bounce back as bulls target the key resistance point at ₹23.37, which is about 16% above the current level. The bullish forecast will become invalid if it drops below the ascending trendline. 

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