Since Inception in 2004 Yes Bank was able to cash the Boom of Banking in India. During Last 14 Years ie from 2005 to 2019 Yes Bank has presence across all states and UT in India and have grown from 300 cr sales and 50 cr Profits to 2400 cr sales and 500 cr Profits in 2010 to till last year they did 34000 cr sales and 1700 cr Profits. P.bank industry was the rising Industry and several banks have cashed this boom, Yes Bank was also one of them & they became 6th Largest P.bank with 1135 branches. We have recommended this bank for a long time. Investment of 1 Lakh if done in 2005 was around 30 Lakh along with 25% profits distributed in Dividends every year.
Boom to Burst: Last Year Q1 was the results with a big Shock when they discussed the NPA’s for the 1st time & investors discovered themself that they were riding in “ship with big Holes”. Q1 were with Big NPA which were not disclosed and considering that NPA itself it was highly clear that this year YesBank would do Big Losses. They were trading near 220 with Book value of 114 and this book value could decrease in respect to the losses incurred. AtLeast we Recommend that we may see a fall from 220 til 90 (due to book value of 114 fundamentally and 90 was 80% retracement level). Rule no#1: Never seek for Profits when we are caught being cheated...Book losses at one. Many people have sold that Gold which we were holding since a long time which was a normal metal now.
Burst to No Guts: As Q on Q passes still they were holding several undisclosed NPA’s which if were converted to Provisions: They would need More Money. Lesson No#1: In Good times all are good, Real faces are seen during Bad Times. 2 Years Global Muted phase attracted problems for some Corporates.
The New Journey: SomeOne was supposed to Fill the holes of Our Ship otherwise it would sink. Unique Public and Private ownership model backed by India’s largest and safest financial institutions. SBI with largest investment of 6050 cr along with HDFC and ICICI of 1000 cr while Axis, Kotak, Federa, Bandhan, IDFC invested few and total New Investment worth 10,000 cr came in and SBI Became largest stake Holder with 48.2%, ICICI & HDFC with 8% each and other Banks got their respective holdings with the lockin of 3 years for 75% of the shares.
Current Year: Sales have fallen by 31% and Made a profit this H1 after huge losses of 17000 Cr last year. FD of Bank decreased from 2.2 lakh Cr to 1 Lakh Cr till May. A Decrease of 60% in Saving and Current Accounts has been seen this year. Book value due to decreased reserve and increased shares came to around 14 from 114. Now as new management would run the bank we may see improvements in coming time, But how much time will it take to wash Huge NPA’s and again see bank streamline. 3 years locking shows banks are prepared for 3 years as they have invested at 10 below Book Value. If the bank Perform new Investors could see Profits. We may not see 100 again for at least the next 3 years, we may see this bank move in the long range of 5 to 50 for the next 3 years. We have been recommending HDFCBank and Kotak as better options in the Private banking Industry, Investment in Best can reap good results.
