YES BANK – BUY or SELL


YES BANK – BUY or SELL

Once upon a time Dalal street favorite banking stock now days scrambling in the Market due to his corporate governance issues, weak financials and huge bad debt in the worst corporate houses, as per Moodys report around 30 % loans to be NPA in total portfolio of the bank,  these various issues started after resigning YES BANK CEO Mr. RANA KAPOOR and few other key personnel in the bank due to the share price of yes bank fall around 90% in the previous year. However New CEO Mr. Ranveet Gill gives assurance to the shareholders many times but it not worked, big investment funds continue to selling his take in yes bank at now retail investor has a major stake in a bank it means that retail investors stand on Edge of Sword. Here, the question arises why Funds exist from these stock?
YES Bank facing some challenging issue which is very difficult for a bank to resolve, here we discuss these issues.

1.     MAINTAINING CAPITAL ADEQUACY RATIO 

    Bank struggling to maintain their capital adequacy ratio which is very important for any bank as per the RBI rules, every bank must maintain a minimum of 8% in tier-1 city, in the second quarter of 2019-20 after lots of efforts bank able to keep its capital adequacy ratio 8.7% but in the next few Quarter for the bank very challenging to maintain capital adequacy ratio because of the constant increase in their provisioning.


2.     EXPOSURE IN WEAK COMPANIES 

      Yes bank has exposure in weak companies like DHFL, VODAFONE IDEA, ADAG, etc. and also in weak sectors like Steel, Iron, Telecom, Gems & Jewelry, etc. and there is much possibility to become NPA and this will directly impact the bank's future loan growth and also impact the bank solvency ratio. 

3.     ISSUES IN CAPITAL RAISING 

     Yes Bank new CEO Ranveet Gill invites the bidders from domestics and overseas for the capital raising to the bank to overcome fund shortage but still its uncertain, Bank called its EGM on 7th February for raising their authorized share capital as a part of capital raising. This may be a key trigger for the stock.  

So, here a big Question is arise whether retail investors should fresh or averaging or sell!

My suggestion for the investor to wait until the finalization of the capital raising plan.




#image courtesy: unknown

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