Global rating agency Moody's on Wednesday upgraded Yes Bank's rating by a notch to B2 as its financial parameters have improved.
The long-term foreign currency issuer rating and long-term foreign and local currency bank deposit ratings of the bank has been raised to B2 from B3, Moody's said in a statement.
At the same time, Moody's has changed the outlook on Yes Bank's ratings where applicable to positive from stable, reflecting Moody's expectation of a further improvement to the bank's credit profile, driven by a cleanup of legacy stressed assets and/or improvements to its capital and profitability, it said.
The rating action is because of substantial improvement in funding and liquidity position, it said, adding this has strengthened depositor and credit confidence in the bank.
The rating action also reflects the fact that despite the significant economic challenges since the onset of the pandemic, Yes Bank's asset quality has deteriorated only modestly while its capital has remained stable, it added.
In the meantime, this is what brokerage houses had said a couple of days back about Yes Bank’s shares, as per Mint report.
Emkay Global: The brokerage house retains a Sell rating on Yes Bank shares with a target price of Rs 10 amid persistent concerns over its asset quality, sub-par return ratios, and unfavorable risk-reward ratio. “Although current management with regulatory/investor support has been able to avert bank failure, we believe that reorienting Yes Bank to a sustainable retail bank will be a tall task," the brokerage said.
Anand Rathi: The investment firm also has a Sell rating on the bank's stock as it expects near-term earnings to remain muted.
“Higher opex counterbalanced higher margins, which led to a 7.5 per cent sequential decline in operating profits for Yes Bank. Asset quality was stable; the restructured book, however, sharply rose. With a high stress book, credit cost is expected to be high in the medium term. We retain a Sell rating with a target price of Rs 12," it said in a note.
Yes Bank came under financial stress last year. The Reserve Bank India on March 5, 2020, imposed a moratorium on troubled lender YES Bank and capped withdrawals at Rs 50,000. Subsequently restructuring plan was notified by the government on March 13 leading to the lifting of the moratorium on March 18, 2020.
