YES Bank, Kotak Mahindra Shares Plunge Despite Positive Q1 Results

YES Bank shares fell by almost 2 percent, while Kotak Mahindra shares declined by about 4 per cent on Monday

Following the announcement of the first quarter (Q1) earnings for the financial year 2023-24 (FY24) in the previous week, two private sector lenders, YES Bank and Kotak Mahindra Bank, witnessed a sharp fall in the stock market on Monday. Shares of YES Bank hit the intra-day high of Rs 18.45 on NSE on Monday morning, registering a gain of 2.2 per cent against its Friday close price of Rs 18.05 per share, as reported by the Mint. However, profit booking soon emerged and YES Bank shares started declining. It was trading at Rs 17.5 apiece as of 2:26 PM on Monday, down by 2.4 per cent from its previous close.

In the Q1 results announced on Saturday, the bank reported a 10 per cent rise in net profit to Rs 343 crore, crediting it to the fall in provisioning by more than 40 per cent. But the market has not reacted well to the results because of the rise in slippages for the bank. 

Provisioning is a measure set by the RBI which requires banks to keep aside a percentage of their money to recover their probable losses on bad assets. Slippages occur when a bank’s loan becomes a non-performing asset (NPA) when the borrower fails to pay interest for more than 90 days. Any addition in the NPAs during the year is referred to as slippage. 

Talking about the drop in YES Bank shares, Saurabh Jain, vice-president (research) SMC Global Securities', said, "The private lender has managed to improve its NII and net profit during April to June 2023 quarter on both sequential and year-on-year (YoY) basis. However, this could become possible due to lowering of provisioning."

Another lender Kotak Mahindra Bank also saw a decline in the early morning market hours of Monday after clocking a huge 67 per cent jump in net profit for Q1FY24 on Saturday. Kotak’s shares tanked about 4 per cent in the initial trade to Rs 1898.8 per share on the NSE. It was trading at Rs 1905 per share as of 2:26 PM on Monday. It was the biggest slacker among the Sensex and Nifty components. 

In its regulatory filing, the bank reported gains from its brokerage/i-banking, ARC, wealth management and insurance businesses, to Rs 4,150 crore for Q1FY24.