JPMorgan Slashes Target Price by 38% Post Supreme Court AT-1 Ruling

Private lender Yes Bank faces mounting selling pressure on Dalal Street as global brokerage firm JPMorgan issued a downbeat forecast, slashing its target price on the stock by 38 percent from ₹21 to ₹13.10 per share. Maintaining an outright 'Underweight' stance on the private sector lender, the brokerage warned that the recent Supreme Court judgment concerning the write-off of Additional Tier-1 (AT-1) bonds valued at ₹8,415 crore could trigger structural headwinds for the bank's core balance sheet.Yes Bank shares slipped another 1 percent in intraday trading on Tuesday, November 3, as institutional investors digested the financial repercussions of potential bond restoration on future profitability and capital adequacy.Capital Depletion and Capital Buffers: CET-1 Ratio Projected to Plunge 240 Basis PointsDetailing its tactical downgrade, JPMorgan emphasized that the legal verdict poses a direct threat to the bank's capital position, with additional downside risks looming if the lender is compelled to resume regular coupon servicing on the reinstated AT-1 debt instruments.Factoring the balance-sheet restoration into its financial modeling—even under the conservative premise that accrued historic interest obligations might not be paid immediately to bondholders—the brokerage expects an adverse impact of ₹1,820 crore on Yes Bank's profit-and-loss ledger for FY27. Furthermore, this balance sheet adjustment is projected to erode the bank’s Common Equity Tier-1 (CET-1) capital ratio by roughly 240 basis points, dragging it down to approximately 11.4 percent and significantly restricting its future lending bandwidth.Steep Earnings Downgrades: Brokerage Cuts FY27 Estimates by 136% Amid Non-Interest Income HeadwindsJPMorgan has drastically revised its medium-term earnings trajectory for Yes Bank downward, slashing profit projections by an unprecedented 136.3 percent for FY27, along with cuts of 7.7 percent for FY28 and 19.7 percent for FY29.Beyond the primary capital hit stemming from bond liabilities, the Wall Street brokerage highlighted emerging vulnerabilities across the lender's non-interest revenue streams, particularly flagging a potential compression in third-party insurance distribution commissions. With earnings visibility clouded by both court-mandated capital adjustments and non-interest income softness, market watchers expect the stock to remain volatile as the bank moves to reinforce its regulatory capital cushion.