Retail Investor asking one questions regularly should I buy Yes Bank for the long term, then my reply is always NO with subject to certain conditions. It is a common mistake in retail investors to catch a falling knife. Whenever any stock falls then there is a reason, so always try to search actual problem and do research then think for buying the stock. If you want to invest for the long term then a lot of better option available in the industry or same peer groups so always go for quality companies. Never take the unnecessary risk of your investment capital to invest in a company just because it has fallen so much. For retail investors, earning a decent return in good stock is always a good bet.
Earlier, Yes Bank posted Q2 result last week (September quarter earnings). The bank posted slightly improvement in its asset quality in Q2 result, the private bank posted Rs. 129.37 crore profit for the quarter against Rs. 600.08 crore loss reported in the same quarter in last year. The last quarter (April – June) was in profit of 45.44 crore.
In 2019, When Yes bank Management was unable to find any investors at that time, there was a question mark for the survival of Yes Bank. Then SBI Chairman and the government have shown interest to help it and finally, all banker come in support it not only survive but also show sign of growth in their business along with their results. But still, a lot of efforts is required then only the business cycle will improve.
In 2020, When Yes Bank posted Q2 Result with profitable earnings, whereas a lot of challenges in line. But still be cautious as bank NPA situation is still under watch, due to COVID-19 Pandemic keep eye on bank NPA (Gross NPA & Net NPA) and growth on margin and interest earned. The situation of gross NPA (Non-Performing Assets) at 16.30 per cent of the total against 17.30 per cent in the last quarter. But in Q2 NPA has been improved to 4.71 per cent from 4.96 per cent in the last quarter.
The Bank Management is still optimistic about their future growth and improvement in margin in forthcoming quarters. “ The bank has generated good operating profit despite COVID-19 and past issues. “ Prasant Kumar, Managing Director and CEO told during the interview.
In Q2 (July – September) quarter earnings, provisions declined on a year-on-year basis, but overall increased in the quarter on quarter basis. Net Interest income fell 9.70 per cent year on year basis.
Brokerage views on Yes Bank
Earlier Brokerage Firm Emkay Global has given a “Sell” rating on Yes Bank with a target price of Rs. 09/- due to higher valuation.
Edelweiss Brokerage Firm has put the stock “under review” due to fundraising and asset quality.
Our views on Yes Bank
As on date, yes bank trading at Rs.12.40 and having a market cap of 31,068 crores and book value is only Rs. 8.66. Earlier, Bank has reduced debt and continuous improvement in NPA from December 2019 to September 2020. We think the bank is back on track, but it will take more time especially December Quarter Earnings will be turnaround story so my message to all retail investors needs to be patient and hold shares for a longer period. Once it crossed 15/- all rating agencies will come and raise its target. Management planning to close non-performing branches and ATMs. Their estimate to cut costs up to 600 crores this year and it will come in future results. Our target is 25/- is intact for the year 2021 after December Quarter Result.
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