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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