Old article of oct 3 2018 when share price was around Rs. 200. I think in the end, this is whatâs going to happen. (just my 2 cents)
Disc: invested
A TV Anchor mentioned an important point on fund raising. The Bank canât raise money via equity anymore than 10% of the market Cap. Given the market cap of YES bank falling continuously and now at 23,374 Cr, there might not be enough capital for YES Bank to get back to normal lending. any views on this?
Market cap ?
Not sure if it really market cap or something else.
I donât think it can be market cap as none of the RBI regulations / guidelines are basis market cap hence seems incorrect
Market cap surely matters for capital raising. There are SEBI norms on pricing QIP based on recent market price.
**13A.3.1 **
**An issue of specified securities made under this Chapter shall be made at a price not less than the higher of the following: **
i) The average of the weekly high and low of the closing prices of the related shares quoted on the stock exchange during the six months preceding the relevant date;
OR
ii)The average of the weekly high and low of the closing prices of the related shares quoted on the stock exchange during the two weeks preceding the relevant date.
Note - I donât mean to sound offensive but is it not wise to at least google before commenting on regulations being wrong etc? I got above info in 2 minutes by google and SEBI link.
Party ended long back but a near bankrupt host keeps getting the bill. Jokes apart, Mr RK should have tried his hand in setting up a distressed fund or even an ARC.
Yes Bank acquired 40 Cr pledge shares of Vadraj Cement, an unlisted company & a big defaulter.
With the stock now under Rs 90 and being hammered daily without any real incremental negative news, the best they can do is announce results ASAP. However bad they might be, thereâs a chance that the market is factoring in even worse than that. Could calm some nerves potentially as thereâs nothing to lose anyways at this point. As for the capital raise,i guess the market no longer believes that one is around the corner. Its become a âshow meâ story now.
At the pace YB is acquiring bad assets , it might become Indiaâs first bad bankđ.
Govt kept thinking about it , but YB is too far ahead.
It does reflect on the credibility of the top management of the bank but also it does on the BoD,the audit committee, the independent auditors, the statutory auditors, the RBI and a host of others who could not foresee the crisis.A sector, where everybody wanted to line up when the banking licences tap was opened and those who queued up were considered geniuses, to a situation where no one wants to apply for a banking licence. In a span of one year it is down from Rs500 odd to Rs.90 and no one knows if there will be a run on the bank and the serious consequences if it were to happen.
I still wonder if it is the only bank which has erred this badly or the others are effectively masking their performance.
Interview with Ravneet Gill today morning on CNBC TV 18. He says he is here to stay for long term and he says companyâs financial position is sound and stable. Take a listenâŚ
4 PE players set to infuse capital in YES Bank; announcement soon
News on potential equity infusion appeared in The Economic Times yesterday:
Companies clarification:
Interesting to note that the news doesnât talk about any promoter participation. If we take the $850M for 20% stake at face value, the PE is valuing the company at about $4.75 Billion post equity infusion. This valuation if true shows the desperation of management. I would say, the best thing to do at present is to to sit and watch the situation unfolding from sidelines. In case the promoters participate in the fund raising, i would close my eyes and invest irrespective of the valuation at which such infusion is made and if not wait for one more quarter and evaluate.
Mr Ravneet Singh Gill seems to be a through professional and if he gets the right kind of support from board, investors and promoters (and assuming the current books of accounts are reveling the true picture of the state of affairs) would take the company out of woods.
Disclosure: Hold a very small trading position via call option.
AJ
Major part of problem in Yes bank is promoters, if Rana Kapoor had shown intent to add stock like Hindujas did with capital infusion in Indusind, the stock wouldnât have fallen to such a level. Additionally, It doesnât even look like he can as promoter is leveraged(has pledged shares) with his other investments and not in driving seat.
Irrespective, PE money would establish trust in the company, base for share price and should change the direction of company towards growth.
Shareholding pattern for June Quarter is out. Retail shareholding holding upto 2 lacs is up from 11.13% to 18.72. Distribution happening.
Results are indicating that cleanup is almost done & they are trying their level best to bounce back. Provisioning is still 43%. Means more NPAs will be declared in coming quarters
- NII grew 2.8% y-o-y to
2,281 Crores in Q1FY20 despite absorbing impact of ~223 crores of interest reversals on account of slippages during the quarter - Pre-Provisioning Operating Profit grew 48.0% sequentially to ` 1,959 Crores
- Net Profit at
114 Crores for Q1FY20 despite absorbing one off impact from MTM provisions of1,109 Crores
yes_Q1_2019_20.pdf (1.1 MB)
Although I see following as well
Disappointed by the results and i donât think cleanup is complete. If they say, it is complete, then itâs only half the truth.
Bad-
- NIM down from 3.1% in March quarter to 2.8% in June quarter.
- PCR remains precarious at 43.1%. No improvement here.
- Gross NPA surged to 5.01% and net NPA to 2.91%. Gross Slippages of 6,232 Crores during Q1FY20.
- CASA ratio at 30.2% only(4 years old Bandhan has >40%)
- Q-o-Q decline in both advances and deposits
Good-
- Pre-Provisioning Operating Profit grew 48.0% sequentially to 1,959 Crores. So they can keep making loan losses provisions of more than 1500 crore every quarter without having to declare net loss. Provisions will be required with PCR at 43%.
- The Bank maintained the Credit cost guidance of up to 125 bps for FY20. (I am doubtful about this, but lets give them benefit of doubt)
- Retail TDs grew by 37.7% y-o-y so improvement there. Retail advances now 18.3% compared to 14% in Q1FY2019. Clear focus on retail liabilities and assets
I was expecting poor net profit on account of increased loan losses provision (BDDR- bad and doubtful debt reserve). However, net profit is down this much not because of loan losses provision, but because of 1,109 Crores of investment MTM provision led by rating downgrades of investments in companies of 2 financial services groups (maybe this includes DHFL?).
PCR remains 43% which means provisioning requirement remains there going forward.
Not expecting a significant improvement in performance in next quarter.
Disclosure- Invested.
Interesting set of numbers. Mr Gill seems to be an honest guy doing all the right things. The growth in retail credit and the fresh slippages arising entirely from the accounts classified as below investment grade at end of Q4FY19 are giving clear direction on where the tide is moving.
This could well be the start of a stand out turn around story. Considering the Net NPA near to 6,900 Crore and assuming they would recover about 50%, the additional write offs required will be in the region of 3500 Crore. The adjusted book value after considering the provisions above will be about Rs. 100 per share. Its now up to Mr. Gill to convince the bankers on the book value multiple at which they will have to invest and this will be a testimony of his skills as an investment banker. As a country we need massive turn around stories to show and teach our next generation, how a group of smart and hardworking people with purpose, honesty and integrity can pull off the so called impossible acts. I wish Yes bank and its management team lead by Mr. Gill all the very best.
Disclosure: Not invested.
AJ