Yes Bank shares have a 19% downside, Morgan Stanley says despite SMBC raising stake

Shares of Yes Bank Ltd. can decline 19.6%, as per brokerage firm Morgan Stanley's note on Thursday, September 18.

The brokerage has an "underweight" rating on Yes Bank with a price target of ₹17 apiece. The stock ended the previous session at ₹21.15 apiece.

In a exchange filing earlier, Yes Bank mentioned that Japan's Sumitomo Mitsui Banking Corporation (SMBC) completed its initial acquisition of 20% stake in the Mumbai-based private lender.

Additionally, SMBC has also signed a definitive agreement to acquire an additional 4.2% stake from CA Basque Investments (Carlyle). Once completed, this will take the total stake of SMBC in Yes Bank to 24%.

Morgan Stanley said in the near-term, it is maintaining an "underweight" rating on Yes Bank, giving the view of a gradual recovery in profitability.

SBI, Bandhan Bank and Federal Bank sold a combined stake of over 446 crore shares worth ₹15,800 crore, in Yes Bank to SMBC as part of the transaction announced earlier this year.

Bandhan Bank said it sold 15.39 crore shares at ₹21.50 apiece, trimming its stake in Yes Bank from 0.70% to 0.21%, while Federal Bank separately said it offloaded 16.62 crore shares at ₹21.50 per share, to SMBC under a previously signed agreement.

SBI was the biggest seller, divesting 13.18% of its stake — amounting to 413.44 crore shares — at ₹21.50 per share, fetching ₹8,889 crore.

The Reserve Bank of India (RBI) had approved the sale in August 22, while the Competition Commission of India (CCI) approved it on September 22. SBI's board cleared the transaction in May 2025.

Of the 11 analysts that have coverage on the stock, two have a "hold" rating and nine have a "sell" rating. No analyst covering Yes Bank has a "buy" rating on the stock.

Yes Bank shares were trading 0.7% lower at ₹21.01 apiece at 2.45 pm on Thursday. The stock has gained 10% in the past month.

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