One can bet on Yes Bank Ltd Stock for long term investment prospective from current market price which is available at Rs 28. Its all time high price was Rs 400 a year back. Investing on this stock, risk factors can be of Rs 28 from the current price scenario but the upside is unlimited for two to three years of horizontal period. Once upon a time ICICI Bank had faced such NPA crisis before, hence it came back strongly over the years.
The management of the bank plays a vital role to make or break the bank assest quality’s. Similar case has been found in Yesbank, Rana Kapoor the ex-CEO could have been top yesbank in the list of private banks. But he was unable to manage bank in a best way, due to an aggressive loan sanctioned to the loss making corporates.
With a hope to earn higher interest rates out from these corporates. Hence the bank authorised person who check and approves the loan files had failed to do a proper homework in terms of recovery process. As per the banking laws, security deposits in terms of loan is required, if a corporates or individuals fail to repay dues on time. Unsecure Loan can hampers bank asset quality and quater results too if the party defaults.
Well a bank earns most from the loan interest. So a risk is always there for bank sanctioning unsecure loans in terms of recovery. A word TRUST plays a vital role in between bank and depositors since decade. Though being a high class private bank (yesbank) has never thought of to see such dooms days ahead.
As i said above the top management individuals plays a key role deciding the bank growth. Everthing was fine and favour of yesbank which has started initiate to top in corporate banking. But bad times never comes knocking, in the mid time suddenly bank loan books turning into npas at a regular basis. Bank finds difficult to recover capital atleast from the default corporates. When one after another started defaulting dues payment a sudden huge fall was seen on the share price. Slowly all around the hidden mystery of the bank came in front of all.
Yesbank market cap has fallen drastically with a news came, when CEO Rana Kapoor was asked to exit his position asap by RBI. To be a realistic, if a person puts his efforts to built a bank can destroy bank as well when it comes to its ego. And if the management put bank in the sake of earning percentage on prior given corporate loans, clearly describes the intention of the individuals for welfare to the bank.
Yesbank has already consumed the negativite hit all around. Recently a moratorium on withdrawal deposits limit of RS 50000 per month set by RBI to avoid cash shortage availability. With no options left, to survive banking facility in the system, RBI prevents Yesbank to fail took SBI and other few private banks contribution support towards bank sustainity.
Currently SBI holds 48% majority stake of yesbank with a face value of RS 2 following by other private banks holding 10% stake with a locking period of 3 years. All time low yesbank share price touched on March 2020 of RS 5 per share. At the same month it rose up to RS 87. A big jump was seen after subscribe of SBI and other banks for infusing funds to yesbank.
Now one has to decide whether to invest in yesbank stock can be a multibagger for long term horizontal or it should be left idle till some positive waves comes in flow for yesbank. As per the SBI officials Yesbank can do wonders in coming years if they succeed to recover a major NPAs amount from the defaulters.
They are confident to get back of Rs 5000cr NPA amount back to their custody this financial year 20-21. Once the loan repayment constantly comes in to the system then Yesbank would be on track believed by veteran SBI officials.