Question is What happened to Yes Bank – Let’s discuss it here;
Greatness of Yes Bank
Yes Bank is the fastest growing bank in the whole country and it is the 4th largest Private Bank. Yes Bank has more corporate partners than any other bank and those corporate’s are big one’s like PhonePe, Flipkart, Swiggy, Redbus & other’s, for more you can refer to this.
Yes bank accounts to more than 35% UPI transactions across the country. Yes Bank is the Big Boy in the Fintech Space, to know more you can look into this. I used almost every bank’s Mobile Banking App and I felt Yes bank has the simplest of it’s kind & it’s quickest service and above all great brand.
They were more than 2 lakh Crores deposits ( Note this point, interesting fact is coming up ) and the employee base of more than 18000.
Why should you invest in Yes Bank
The Issue Price for Yes Bank’s IPO is at Rs. 45 way back in 2005 and it hit the all time high of Rs. 400 ( After Considering Split of 10:2 which was made on 21st Sep, 2017) and the all time low’s of Rs. 5.55 and Currently it is trading at Rs. 28.8 ( As of Mar 11th, 2020)
Rana Kapoor Co-founder of Yes Bank, who is quite aggressive and always willing to do more than expected and surprise everyone with the results he used to get. At one point Yes Bank is Fastest growing Bank and it’s Loan Book is on rise and I think it might touched the sky as well 😉
Just have a look at these tweet’s made by CEO himself on Sep 2018 exactly 1 year after Shares were Split ( Note this point as well because things are getting interesting…)
And these tweet’s were followed by another set of tweet’s, which were even more seducing to buy the stock at hefty valuations…
What went wrong when everything is under control
Aggressive Expansion by allotting loans to those sectors and those companies which doesn’t have potential to repay it. Forget about the principal amount these companies operations were also not sound enough to pay even the interest amount on time. But still they allotted because the Interest rate is way higher than the peers in the Industry. ( Source – Annual Report)
They ended up giving more loans to Sick companies, Stressed Companies and the story began here, back in 2015 UBS report had raised a Red flag about this exponential growth. Just look at the loan book on yearly basis;
| FY 2014 | Rs. 55,000 cr |
| FY 2015 | Rs. 75,000 cr |
| FY 2016 | Rs. 98,000 cr |
| FY 2017 | Rs. 1,32,000 cr |
| FY 2018 | Rs. 2,03,000 cr |
| FY 2019 | Rs. 2,41,000 cr |
Now it has a loan book of over Rs. 3 lakh Crores but it’s deposits were only Rs. 2 lakh Crores and out of these loans the NPA’s ( Non Performing Asset – Not collected with in 90 days from the date of payment accrued ) has also rose significantly over the years and it reached to the record level.
Role of RBI
In 2017, RBI noticed that NPA’s of Yes Bank is increasing constantly and RBI also felt that there are 5x more NPA’s which Yes Bank is not disclosing and the day came and RBI asked Yes bank to come with cleaned Books of Accounts ( RBI found Half a Billion $ more NPA’s ) & Drama Begins…
Sep 2018, RBI decided to remove CEO Rana Kapoor from the board from Jan 2019 to save bank from going bad to worse and the Interesting part here is all the tweets you had seen above are made on Sep 28th, 2018 better you can recheck once.
Nov 2018, top management started leaving the company &
Dec’18 to Mar’19 – Stock was very volatile in the markets and only few people know the reason why
Mar 2019, Ravneet Gill has became new CEO of Yes Bank
April 2019, For the first time in the history of the company, Yes Bank has posted its Maiden Loss in it’s Q4 Results and stock was down by more than 30% . A fellow trader told me this;
Rushi, I cleared all my debts with this single trade.
He brought few lots of Put option just 2 days before the quarterly results, if I’m not wrong he made a profit of close to Rs. 1.5 lakh’s. ( This is totally a different story altogether, will discuss some other time)
I asked you to Note few points and hope you remember, if not you can revisit because almost after 1 year the Co-founder & Former CEO Rana kapoor tweet’s were made ie;
On Nov 2019, he sold almost all the stack he has in Yes Bank, despite of his promise through tweets
Another fellow trader told me;
I invested close to 1 lakh after seeing the tweets made by Mr. Rana
And the sad part here is ‘ She is still holding the stock with a Avg Buy price close to Rs.200 ‘, after listening to this then I realized the these words from Zerodha Founder.
As of March 2020, RBI took over the bank’s operations and declared Moratorium by saying depositor’s, you can’t withdraw more than Rs. 50,000 till April 3rd.
Exceptions are;
You can request to make a bigger withdrawal, subject to conditions that include a maximum limit of Rs. 5 lakhs.
- To pay for medical treatment
- To cover higher education costs, in India or abroad
- To pay for “obligatory expenses” for a wedding or other ceremonies
- In “any other unavoidable emergency“
The stock was down by more than 50% and the whole market took blood bath on that day ie; March 5, 2020. Most probably this Moratorium will end in a week or two.
Current status of Yes Bank
- RBI took over the operations and appointed SBI’s former CFO as Administrator,
- Mr. Rana Kapoor was arrested by ED on Money Laundering allegations,
- Declared Moratorium and the whole bunch of people hit the bank branches in no time,
- All the business had gone for peers like ICICI Bank, Axis Bank…etc
- Big hit on Brand called ” Yes Bank “
But despite of all these above points the share price in the market is doing quite well.
Why SBI?
SBI along with few others like LIC, HDFC Bank will buy 49% stake for somewhere in between Rs. 2400 Cr to Rs. 5000 Cr.
This is not new and it is continuing because country like India can’t afford to loose a bank like Yes because the public perception changes and no one puts their money in banks ( What happens when Bank goes bankrupt ) and in fraction of seconds the whole country will collapse because –
For any country Financial Sector is the Backbone and No one want’s to get broke.
Investors holding Yes Bank shares
So, now you have to tell me what is your Avg Buy Price and how much Quantity you’re holding. I narrated the whole story to you & you have to tell me whether you want to Hold or Buy more or Sell. You should refer to the below point ie; As on Mar 14, right now.
Thinking to Buy Now
If you have not yet Invested in Yes Bank and looking at the current scenario if you fell like investing in it then you can go ahead and do it. Because, I explained the pro’s & con’s to you and the final decision is your’s.
If you buy now & win it then credit goes to you. If loose then you have to take the blame as well.
What I’d like to do
I would like to do Intra-day trades because I love volatility and litigation stuff. This stock will be very volatile for next 5 – 6 months till everything comes under control. Best thing to trade is ‘ Volatility ‘.
The reason is simple –
The risk reward ratio is very attractive when compared to other options.
As on Mar 13
Along with SBI, LIC & HDFC Bank, the likes of Kotak Mahindra Bank, ICICI Bank, Axis Bank has also brought some stake in Yes Bank. You can refer to this.
As on Mar 14
RBI & Finance Ministry took a dare decision and they convinced all the stake holders on that decision and that dare decision is 3 year lock in period for all the investors including retail investors like you & me up to 75% of stake. You can refer to this.
Exception to this –
SBI can sell where ever they want to sell and No Lock – in period for them & other lucky boys are Investors who hold less than 100 shares.
Why this Lock In period?
Just to keep this stock bit stable in the market and avoid high volatility. Just to keep it in simple terms
Govt don’t want to give extra advantage for the people like me, who trade volatility.
I encourage this move because country like India do need investors not speculators.
Let me know your views as well and willing to hear more from you.
Until then, this is Rushi. Happy Trading !
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