YES Bank shares down 20% in 1 year. Can RBI’s nod to SMBC deal push the stock towards Rs 23?

YES Bank shares have been a roller-coaster for investors over the past year, down nearly 20% but showing sparks of recovery this week after the Reserve Bank of India cleared Sumitomo Mitsui Banking Corporation to buy as much as 24.99% in the private lender. The move, one of the largest foreign banking bets in India, has revived debate among investors on whether the stock is primed for a turnaround or still weighed down by structural risks.

YES Bank closed 1.4% higher at Rs 19.55 on Monday, after rising as much as 5.4% intraday to Rs 20.33. The stock has fallen 19.8% over the past year, but is up 0.4% so far in 2025, and nearly 10% in the last six months. It has gained 2.4% over the past week.

From a technical standpoint, the stock is trading above all eight of its key simple moving averages, including the 5-day to 200-day SMAs. The RSI stands at 49.9, signalling a neutral setup, while the MACD remains at -0.1, below the centre line, indicating lingering bearish undertones.

Ajit Mishra, SVP, Research at Religare Broking, said, “Yes Bank’s stock is showing signs of near-term recovery after finding support around the Rs 18 zone. Currently trading near Rs 19.6, the immediate resistance is placed around Rs 20.5–21, followed by a stronger hurdle at the Rs 23–24 zone. The near-term bias remains cautiously positive, with a target of Rs 21–22 if momentum sustains and broader markets remain supportive.”

Analysts weigh in

According to Kunal Kamble, Sr. Technical Research Analyst at Bonanza, YES Bank has rebounded from its trendline support, but broader trends remain under pressure. “YES Bank has seen a pullback from its falling trendline support, pushing the stock up towards Rs 20.20. However, it continues to form a Lower Low–Lower High structure, which keeps the broader trend weak,” he said.

Kamble added that immediate resistance is at Rs 20.65 and support at Rs 18.34, with a breakdown potentially dragging it to Rs 17.54.

KKunal V Parar, VP of Technical Research and Algo at Choice Broking, highlighted bullish cues: “On the daily chart, the stock is attempting to hold above its 21-day Moving Average, indicating a positive near-term trend. At the same time, it is facing strong resistance around the 100-day Moving Average, placed near 19.55. A sustained move above this level could open the door for further upside momentum.”

Parar said, “If the stock sustains above 19.55, we expect a strong upside move towards 20.70–23 levels, while maintaining a strict stop loss at 18.30.”

SMBC deal and outlook

The Reserve Bank of India on Saturday allowed SMBC to acquire up to 24.99% of YES Bank’s paid-up share capital and voting rights. The approval is valid for one year starting August 22, 2025, subject to other clearances, including from the Competition Commission of India.

The Japanese lender plans to raise its holding to 20% via a secondary market stake purchase, including 13.19% from State Bank of India and 6.81% from seven other lenders: Axis Bank, Bandhan Bank, Federal Bank, HDFC Bank, ICICI Bank, IDFC First Bank, and Kotak Mahindra Bank.

Vaibhav Vidwani, Research Analyst at Bonanza, said the deal, valued at about Rs 13,482 crore, “is expected to result in a significant capital infusion, greater international expertise, and some improvement in investor confidence, but will not fundamentally alter the bank’s core structural challenges in the medium term.”

Vidwani said, “SMBC will secure up to two board seats, bringing global governance standards and operational expertise, though it will not be classified as a promoter. The upcoming CEO succession, catalysed by the deal and potential board changes, may also shape YES Bank’s trajectory in the coming years.”

Risks and fundamentals

While analysts view the deal as credit positive, risks remain. “SMBC's involvement is viewed as credit positive given its international expertise and stringent risk management, which could further institutionalise YES Bank's underwriting and provisioning practices,” Vidwani said.

As of June 2025, YES Bank’s gross NPA ratio stood at 1.6%, net NPA at 0.3%, and combined stressed assets at 0.5% of advances. The provision coverage ratio remained strong at 80%. Retail and SME loans now account for about 60% of advances, reducing concentration risk.

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But regulatory conditions are binding. The RBI said SMBC will not be classified as a promoter and mandated compliance with the Banking Regulation Act, the Foreign Exchange Management Act, and the RBI’s guidelines on shareholding in banks. Lock-in clauses and approvals from other regulators may still shape the timeline of the deal.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)