Yes Bank share price is in deep trouble. After soaring to a high of 24.80 INR in December, the stock has plunged by about 30%, meaning that it has moved into a bear market. It was trading at 17.55 INR on Friday as concerns about the company’s future remained. So, is the small Carlyle-backed bank a good investment?
Yes Bank stock price has been in a strong downward trend after the company unveiled its financial results this month. In all, the company said that its quarterly profits plunged by 80% in Q4 as the cost of doing business and provisions for bad debt rose.
It lost more than $6 million during the quarter and signaled that the situation could worsen in the coming months. The only strong part for the company was the net interest margin, which rose, helped by the relatively higher interest rates in the country.
Yes Bank has been going through a transition, which will now be helped by Carlyle Group and Advent International. The two American private equity companies took a stake in the company betting that they could help in its turnaround. They are experienced players that have invested in these special situations in the past. Yes Bank has also offloaded the toxic parts of its balance sheet to JC Flowers, an American financial specialist.
Yes Bank share price analysis
In December, as the Yes Bank stock price was soaring, I cautioned investors against buying it. At the time, I noted that the shares had gone up too fast and became overbought at the same time. I also wrote that the shares were slowly forming a double-top pattern, which is usually a bearish sign. This view was accurate as the stock has now crashed and is trading at the neckline of the double-top pattern.
Yes Bank shares have also crashed below the 50-day and 100-day moving averages and the important support at 18.20 INR, the highest point on September 9. Therefore, I suspect that the stock will likely continue falling as sellers target the next psychological level at 15.30 INR, which was the double-bottom point between September and November last year. This price is about 13% below the current level.