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    YES Bank a multibagger in the making or a trap for investors?

    Synopsis

    Investors hunting multibaggers on Dalal Street are eyeing the stock keenly, as it traded just a fraction above its previous high.

    Agencies
    Independent market analyst Ambareesh Baliga said one should not expect the stock to scale previous highs.

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    After private lender YES Bank unveiled September quarter earnings this past Friday, the scrip has created some buzz among investors on Dalal Street.

    The bank has been able to reverse the tide and showed slight improvement in asset quality. It posted Rs 129.37 crore profit for the quarter against Rs 600.08 crore loss reported for the same quarter last year. June quarter was profitable at Rs 45.44 crore.

    Investors hunting multibaggers on Dalal Street are eyeing the stock keenly, as it traded just a fraction above its previous high.

    But analysts have a split verdict on the lender.

    Independent market analyst Ambareesh Baliga said one should not expect the stock to scale previous highs. “After the expansion and dilution of equity capital, it is very unlikely to go anywhere that mark," he said.
    “It is a very rare case when a bank has survived an RBI-imposed moratorium. In earlier instances, such banks were either unable to survive or merged with larger peers," he said.

    Just a year back, there was a question mark over the very survival of YES Bank. Since the government has to put in a professional management, which has managed to help it not only survive but also show some early signs of growth.

    “YES Bank has posted decent earnings, considering the challenges it has faced over past several quarters,” said Ajit Mishra, Vice-President for Research at Religare Broking.

    “But we would still be cautious as the NPA situation could worsen due to the pandemic. At this point, the prudent approach would be to stick to large private lenders,” he said.

    Analysts are keeping a close watch on NPA, provisions, margins and growth in deposits and loan books. The percentage of gross non-performing assets (NPA) stood at 16.30 per cent of total against 17.30 per cent a quarter ago. Likewise, net NPA improved to 4.71 per cent from 4.96 per cent sequentially.

    The stock traded 2 per cent down at Rs 12.57 in a depressed market on Wednesday.

    The bank management is very optimistic about further improvement in the forthcoming quarters. "The bank has generated decent operating profit despite Covid-19 and past issues,” Prashant Kumar, Managing Director and CEO, told ETNow.

    He said growth and disbursement of retail and MSME loans has been good. “The bank has really accelerated on its recovery path, and normalcy is being restored," Kumar told ETNow.

    In September quarter earnings, provisions declined on a year-on-year (YoY) basis, but increased quarter-on-quarter (QoQ). Net interest income (NII) plunged 9.70 per cent YoY to Rs 1,973 crore.

    Baliga thinks YES Bank is back on track, but the turnaround will take a bit more of time. “No fortunes will be made overnight. Investors need to be patient and hold on for a long time for better performance,” he said.

    Mishra of Religare Broking said there could be some initial uptick in the stock, but sustainability is dubious. He advised investors to wait and watch the lender’s performance in the second half of the financial year.

    Brokerage Firm Emkay Global has a ‘sell’ rating on the YES Bank stock with a price target of Rs 9. It cited sub-par return ratios and unfavourable risk-reward with higher valuation than peers.

    Edelweiss has put the stock 'under review'. “Though capital-raising is past, deposit accretion and asset quality are key elements to monitor, not to mention stakeholder confidence. Evolution focus over the next two–three years is very much an open question,” the brokerage said.

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    36 Comments on this Story

    Govind Gaur13 days ago
    Yes Bank has now become no Bank. This Bank has cheated own customers by guiding them to invest in AT1 BONDS. THEY did it by purchasing these BONDS from SECONDARY MARKET by obtaining unfilled documents. We will have to understand their modus operandi. They had approached senior citizens who had bank deposits who definitely need interest income to pay their taxes & bills. But this dishonest Bank has refused to pay even interest
    amount. This Bank has cheated them & now entire deposits have been swallowed .Such type of SHOULD not prosper. If it succeeds it will be failure of banking system. IT IS MY WARNING TO YES BANK.
    Govind Gaur26 days ago
    The success of YES Bank will depend on how they managed their depositors. Their past track record is not satisfactory as they cheated Sr. CITIZEN by fooling them that AT1 BONDS ARE secured which has been W/O. How a Bank can prosper who deny payment of hard earned money taken by for growth.
    Mohan Gazinkar27 days ago
    YES BANK is not only foolinng investors by showing profit figures but also duping bank depositors by swallowing their deposit amount,for showing false profit. Alreedy AT1 bondhoders whose money is swallowed by bank had put a Case in High court for refund of their bond amount and interest thereon. Amount more thn 8,000 crores.
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