Yes Bank Investment analysis

 

Banking is the all time favourite sector for Indian investors. We have so many dedicated index just to show our deep connectivity with banking sector. Now just the yes bank saga is important for us but let me give you a very short and crisp background for today’s story after a short intro..

The Indian banking sector was framed somewhere around 1806 by the name Bank of Calcutta which was later named as Bank of Bengal. In 1935 Reserve Bank of India was established under the RBI Act.

Many banks like Vijaya bank, Corporation bank, Oriental bank of India,

Now known as Bank of Baroda, Union Bank of India, Punjab National Bank, 

In the early 1990s, the then government embarked on a policy of liberalisation, licensing a small number of private banks.

These came to be known as New Generation tech-savvy banks, and included Global Trust Bank.

Banks like Indusind Bank, Yes bank, HDFC bank, and Axis Bank were given licence to operate its banking businesses all over India.

This move, along with the rapid growth in the economy of India, revitalised the banking sector in India, which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks. 

Now Let’s start with the Great Yes Bank Saga

Yes Bank Limited is an Indian private sector bank headquartered in Mumbai, India and was founded by Rana Kapoor and Ashok Kapur in 2004. It offers wide range of banking and financial products for corporate and retail customers through retail banking and asset management services.

Yes bank is equipped with all latest banking facilities like card payment mechanism and its state of the art internet banking system became the prominent choice for the corporates.

It was the ultimate pick for many investors from early 2009 from a price of 10rs.50paise up till 2018 when it reached 366 mark at the National stock exchange.

But as it’s said every ship has its anchor attached. Yes bank also faced unavoidable circumstances which shook the entire investor confidence and has to face a down trend in its price movement from Rs.394 to 5rs 65paisa.

It was a shocking situation for retail investors as well as the Mutual fund houses.

This Blood bath situation also shook the Nifty and Bank Nifty index thoroughly.

RBI governor Shaktikanta Das stated that the matter would be resolved "swiftly"; Finance Minister Nirmala Sitharaman announced a proposed turnaround plan, under which the State Bank of India would take a 48% stake in Yes Bank and introduce a new board.

on April 2020, RBI appoints SBI to rescue Yes Bank, in from of investment with assistance from other lenders, like ICICI Bank, HDFC Bank and Kotak Mahindra Bank. SBI went on to own 48% share capital of Yes bank, which it later diluted to 30% in an FPO in the following months.

Let me tell you FPO (Follow on Public Offer) is a process by which a company, which is already listed on an exchange, issues new shares to the investors or the existing shareholders, usually the promoters.

On 6 March 2020, ICRA downgraded the rating of Yes Bank's ₹526 billion (US$7.4 billion) in core bonds to a "D" rating, while Moody's downgraded them to "Caa3". On 8 March 2020, During all this setback for yes bank the founder Rana Kapoor was arrested by the Enforcement Directorate under charges of money laundering.

Now talking about the current business and positives points

Yes Bank provides Unified Payments Interface (UPI) services for a number of major companies, such as Airtel, ClearTrip, RedBus, and PhonePe among others. In January 2020, it was responsible for handling 514 million UPI transactions out of the 1.31 billion made that month. Yes bank has acquired over 24 percent of stake in dish TV India on 30 May 2020.

Major stake in Yes Bank are held by Rakesh Jhunjhunwala, Radhakishan Damani and Azim Premji As these investors focuses on the principle of Value investing, it is a positive indicator for investors with long term perspective.

We hope this article has cleared your doubts in case you still have some points to clear do comment your queries in the comment section down below. We will surely answer your doubts.

Hope you liked this blog.

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