YES Bank shares: Resistance seen at Rs 18; stock may climb up to Rs 40 in long term, say technical analysts

June 10,2023

Shares of YES Bank took a U-turn on Friday as the stock dropped about 2 per cent as the initial euphoria fizzled out. However, analysts reading the technical charts, continue to remain mostly positive on the stock but caution that their advice shall be taken with a pinch of salt.

YES Bank shares rose to Rs 16.94 on Friday, before falling about 3 per cent from the day's high to Rs 16.55. The stock had settled at Rs 16.76 on Thursday with a total market capitalization of Rs 48,000 crore. Despite a fall of 23 per cent in the year 2023 so far, shares of Yes Bank have delivered a return of about 30 per cent to investors in the last one year.

According to the technical experts, who decode YES Bank's charts, the stock is likely to continue to move higher, supported by the higher volumes. The stock has closed above its long-term (50 and 200 days) daily moving averages (DMA), with a positive crossover of short-term (5- and 2- DMA) supporting the bullish stance.

"YES Bank has seen a steady and gradual rise in the past 2 months, currently hovering near the crucial 200-DMA of Rs 17 with huge volume participation improving the bias, further rise is anticipated provided a decisive breach above the significant 200-DMA and previous peak zone of Rs 17.30 is established to confirm the trend," said Vaishali Parekh, Vice President - Technical Research at Prabhudas Lilladher.

"A breakout would confirm a fresh upward move with the next target expected till 18.50. At current levels one can keep the stop loss of 15.90-16 levels below which the bias can turn weak," she added.

"YES Bank, on its daily charts, has broken out of its falling trend line with volume, indicating a short-term reversal in this stock. It can be observed that the stock has closed above its 50DMA and has just managed to close at its 200 DMA, with positive crossover of 5 and 20-DMA supporting the bullish stance," said Sujit Deodhar, Head Technical Analyst at Wellworth Share & Stock Broking.

The private lender currently commands a P/E multiple of 64.6 times, with its return of equity (RoE) at 2.18 per cent and return on capital employed (ROCE) at 2.18 per cent. It is currently trading at a price-to-book value of only 1.14 times.

For many investors, YES Bank was a wealth creator and for many, it worked as a capital destroyer. The stock has witnessed extreme J curve growth and falling knife fall too. It recently traded at its low of Rs 5.65 after an all-time high of Rs 422, said VLA Ambala, a SEBI registered research analyst at Stock Market Today.

The current level looks like it is making a bottom and could be a good opportunity to enter only if you are ready to take a risk of stop loss at Rs 11. Targets that could be seen in the near future are Rs 20, Rs 22.10, Rs 24 and Rs 25 and if the price sustain above Rs 24-25 to level next Rs 28, Rs 30, Rs 33, Rs 35 and Rs 40 are the targets, with a trailing stop loss at Rs 18 in next 2-10 months, she said.

One thing one should notice is that now it is trading at its listing price almost, so if it fails to survive here it’s better to exit and explore other opportunities. Last holding levels should be strictly at Rs 12, Ambala cautioned investors.

YES Bank had reported a 45 per cent drop in standalone net profit at Rs 202 crore for the quarter ending March 31, 2023, as provisions for bad loans increased. The bank reported a standalone net profit of Rs 367 crore in the year-ago period.

YES Bank sees scope to expand its net interest margin by 100 basis points over the next three years by raising more low-cost deposits and lending to higher-yield clients, its managing director and CEO Prashant Kumar told Reuters in an interview earlier this week. "YES Bank is also counting on higher fee income growth to help improve margins," he added.