Shares of Yes Bank surged 2 percent intraday on Friday as investors cheered a strong response to the qualified institutional placement (QIP) by the bank.
The lender on Thursday announced the launch of a USD 650 million QIP issue with an option to upsize to USD 750 million.
The issue was oversubscribed over 2.5 times at a price of Rs 1,500 per share, according to a CNBC-TV18 report.
The country’s fourth largest private lender had set the floor price at Rs 1,498.95 per share based on Securities and Exchange Board of India (SEBI)-calculated average, with an indicative price band of Rs 1,455 – 1,500.00 per share.
The strong response to the QIP could have also possibly been on the back of a strong financial performance. The private sector lender had surpassed analysts’ expectations on third quarter earnings front. Its net profit shot up 25 percent year-on-year to Rs 675.7 crore on strong net interest income, other income and operating profit growth despite higher provisions and tax cost.
JPMorgan is overweight on the stock with a target price of Rs 1,500. The research firm is positive on the stock and said it was one of its top picks. The bank’s qualified institutional placement (QIP) worth USD 650 million was a positive trigger for the stock. Furthermore, it feels that the issue will remove a overhang from the stock and improve its balance sheet.
The bank had called off a QIP offer for USD 1 billion in September last year.
While the market had speculated a poor response, the company cited confusion over QIP guidelines and claimed that the response to the QIP was solid.
The price band of the issue for which Goldman Sachs, Motilal and CLSA were the merchant bankers, was Rs 1,350- Rs 1,410 per share.
Market regulator Securities and Exchange Board of India had conducted a probe into the matter and contacted Yes Bank’s merchant bankers.
The regulator’s preliminary findings suggested that disclosure requirements had not been correctly followed in the issue.
The stock gained nearly six percent in the past one month, while its three-day gain stood at 3 percent. At 13:00 hrs, it was quoting at Rs 1,529.45, up Rs 13.40, or 0.88 percent on the BSE. It touched an intraday high of Rs 1,543.90 and an intraday low of Rs 1,525.80.