Yes Bank is on the roll; what should you do?

Market participants say a volatile stock price is a challenge to fundraising, even though the bank has been claimed that it is on track to raise funds.
The shares of YES Bank are seeing a sharp rise. Any idea why?
Could it be media reports of industrialists showing interest in the bank or the fundraising plans of the private lender or promoters paring their stakes?
Or, is it because the time of YES Bank has finally come?It may be too early to say—the bank is yet to come out with its September quarter earnings and its fundraising plans are also facing hurdles.
Experts, however, say the fundamentals of the bank are showing signs of improvement.
"Fundamentals are definitely looking improved as the cost of money is low and the bank is looking to raise capital. The weakness of the leverage players is out and the ownership of some of the FIIs is reduced," said Sanjiv Bhasin, Executive VP-Markets & Corporate Affairs at IIFL.
"Since the broader market is looking to outperform, there will be more risk-on trade. If you are in the stock, stay put because the worst may be in the price. We don't rule out the target price of Rs 75 for the stock for the coming six months
."In the recent past, the rally in the broader market was underpinned by 20-odd stocks such as HDFC Bank and Bajaj Finance. With signs of better fundamentals, investors want to bet on beaten-down stocks that can outperform the market.
"People want to bet on stocks that are underperforming the broader market such as RBL Bank and YES Bank who have seen drubbings of late. YES Bank will have some truth, some false," Bhasin said.
A day after logging a strong gain of 15 percent, shares of YES Bank continued their ascent on October 18, rising as much as 9 percent in intraday trade on BSE.
The stock has been in the green since October 14 and looked on course to extend its winning spree into the fifth consecutive session on October 18.
The gain has come after sharp losses in September, driven by one of the bank’s promoters selling his stake.
Market participants say a volatile stock price is a challenge to fundraising, even though the bank has been claiming it is on track to raise funds.
Analysts point out that the bank needs money almost equal to its current market capitalisation over the next two-three years and such a raising would happen at well below book value that will hurt minority shareholders.
Uncertainty on this front still surrounds the bank.
Media reports are suggesting industrialists Sunil Mittal and Sunil Munjal have envisaged interest in acquiring a stake in the private lender.
The bank, however, denied any such development, refusing to comment on it, but at first glance, it appears that the market is happy with this speculation as the stock has been witnessing healthy gains after the reports surfaced.
Promoter Rana Kapoor’s holding in the bank declined to 3.92 percent in the September quarter against 4.31 percent in the June quarter.
Is it good for the bank?
"It is positive as the overhang of selling is done. However, now there are two important triggers to be watched—Q2 results and progress on fundraising," said Sameer Kalra, Founder, Target Investing, who has a buy call on the stock.
In the long run, what plays in favour of a company is the faith of its investors. YES Bank has managed to keep the faith of retail investors in the quarter gone by.
The latest data shows, mutual fund houses increased their holding to 9.26 percent in the September quarter from 6.59 percent.
Moreover, with promoters selling their stake, retail investors have bought about 7.6 lakh shares of the company over the past year.
While there are some bright spots, a clear picture will emerge after the September quarter results are announced.
"The September quarter result is important to see the stress on the company's book. That will tell us whether the fundamentals are improving or deteriorating further," said Jaikishan Parmar, Equity Analyst at Angel Broking.
The stock is the high beta one. There is a larger pattern that has completed around Rs 40 which makes it attractive at lower levels at present.
"The kind of pullback after that drop to Rs 30 level has completely trapped the short-sellers at lower levels. This is a good momentum building up in the stock and as well it is fuelled by short-covering. We may see this momentum further moving up with the next level of resistance around Rs 58 and Rs 72," said Mustafa Nadeem, CEO, Epic Research.

Yes Bank seeks to arrest further decline in stock prices, affirms strong financials

The private sector lender's share price had plunged by nearly 30 percent during intra-day trade on October 1, before closing the session down by 22.8 percent at Rs 32.
A day after a sharp fall in its stock price, Yes Bank on October 2 said the decline was mainly due to forced sale of 10 crore equity shares on the back of invocation of pledged shares by a large stakeholder.

Yes Bank also said its financials are strong, with the liquidity position well in excess of regulatory requirements.

The private sector lender's share price had plunged by nearly 30 percent during intra-day trade on October 1, before closing the session down by 22.8 percent at Rs 32.

"This fall was primarily on account of the forced sale of 10 crores equity shares (3.92 percent of the bank's equity share capital) triggered by an invocation of pledge on the equity shares of a large stakeholder," it said in a filing to the stock exchanges.

With this sale, the entire pledge stands extinguished and all sale under the same duly completed, it added.

Stock markets were closed on October 2 on account of 'Gandhi Jayanti'.
Meanwhile, Reliance Nippon Asset Management Company (RNAM) had on October 1 directed its trustees to sell the remaining shares pledged by Rana Kapoor, co-founder of Yes Bank, as a collateral with the mutual fund house, sources said.

Kapoor, who is also a promoter of Yes Bank, has less than 5 percent stake left in the private lender, and the same has been pledged with RNAM.

"RNAM has given instruction to its trustees to sell entire holding of Kapoor in Yes Bank," a source had said on October 1.

In its filing on October 2, Yes Bank also asserted that its financial and operating metrics remain intrinsically stable.

"Over the past few days, unfounded speculations regarding the bank's deposits/liquidity have been brought to its notice. In this regard, kindly note that the bank had a Liquidity Coverage Ratio in excess of 125 percent as on September 30, 2019, which is well above the minimum regulatory requirement of 100 percent," it said.

The bank's gross advances as on September 30, 2019 stood at Rs 2.32 lakh crore, as against Rs 2.42 lakh crore by June-end 2019, with a higher share of retail advances compared to June, it added.
The reduction in advances was effected to enhance capital efficiency, Yes Bank said.

"Further, deposits aggregated to Rs 2.09 lakh crore as on September 30, 2019. CASA Ratio improved to nearly 30.8 percent as compared to 30.2 percent as on June 30, 2019," it said.

Kapoor and his group entities had sold 2.16 percent of their stake in the bank worth Rs 510 crore through open market transaction on September 26-27.

After this, Kapoor and his group entities' stake in the bank came down to 4.72 percent.
Earlier last week, Yes Capital, one of the promoter entities of Yes Bank, sold 1.8 percent stake in the private sector lender.

The stake sale helped the promoter group entity mop up around Rs 240 crore.
Last month, another promoter Morgan Credits had sold 2.3 percent stake in Yes Bank for Rs 337 crore to prepay a certain part of its outstanding dues to Reliance Nippon Life AMC.

Share Market Update: Sensex, Nifty Crash To Lowest In 5 Months; SBI, Yes Bank Dip 4.5%

Amid the continuation of selloff in Indian markets, domestic indices BSE Sensex and NSE Nifty 50 plunged Thursday's session on the back of weak global cues following a humdrum economic data, unabated foreign fund outflows and disappointing quarterly earnings. The carnage in today's session dragged indices to fresh five-month lows with the S&P BSE Sensex slipping below the 37,000 mark.  After a weak opening, the 30-share BSE Sensex plunged more than 750 points in late-afternoon trade, before finally ending at 37,018.32, down by 462.80 points or 1.23 per cent.

Likewise, the broader NSE Nifty dropped 138 points or 1.24 per cent to end at 10,980.00. In the Sensex pack, Vedanta took the biggest hit (5.55 per cent), followed by Tata Motors, SBI, Yes Bank, Bharti Airtel and Infosys, which lost up to 4.50 per cent. On the other hand, Maruti, Power Grid, Reliance, Bajaj Auto, Hero MotoCorp, HUL and NTPC ended in the green, spurting up to 1.86 per cent.

After the release of official data post market hours on Wednesday, the overall investor sentiment was weak and it showed that growth of eight core industries dropped to 0.2 per cent in June, mainly due to contraction in oil-related sectors as well as cement production. In addition to that, fiscal deficit touched Rs 4.32 lakh crore for the June quarter, which is 61.4 per cent of the budget estimate for 2019-20 financial year.

Even on the global front, the US Federal Reserve reduced the benchmark lending rate by 25 basis points to 2.0-2.25 per cent on Wednesday for the first time in more than a decade. However, Fed Chair Jerome Powell said the move was not the beginning of a long series of rate cuts, sending global markets lower.

A disappointing July sales data was reported by major automobile manufacturers on Thursday. In addition, subdued corporate earnings also continued to weigh on the markets, traders  noted.  Foreign investors sold shares worth Rs 1,497.07 crore on a net basis on Wednesday, as per provisional data with stock exchanges.

Elsewhere in Asia, Shanghai Composite Index, Hang Seng, and Kospi ended in the red, while Nikkei edged higher. Equities in Europe were trading mixed in their early sessions. Meanwhile, the rupee was trading 26 paise lower at 69.06 against the US dollar (intra-day). The global oil benchmark Brent crude futures fell 1.05 per cent to USD 64.37 per barrel.