Yes Bank - Knee Jerk reaction

[protrade]

We need to see the Yes Bank statement in perspective.

- The Company has made provisions for its entire exposure to IL&FS as well as Jet Airways.

- There is scope for recovery in both these assets - and whatever recovery there is, will go directly to bottom line.

- Despite these provisions, and despite the massive loss, Yes Bank is still profitable on a full year basis.

- and even based on last years depleted profits, it is available at a multiple cheaper than where Nifty is today!

- This means, even if EVERY YEAR this sort of hit damages Yes Bank, it will still be a better investment than most stocks in the Nifty!

 

[protrade]

What do I mean by “scope for recovery”? For instance, in Jet Airways, Etihad has offered 20% loan repayment to all debtors, as a “settlement”. That means, of Jets ₹ 800 crore exposure, ₹ 200 crores will be recovered. That ₹ 200 crores will go directly to bottom line. Jet airways shares are still not at zero. For bonds to take even ₹ 1 hit, stocks have to go to zero first!

Similarly, in IL&FS, there are lot of infra assets which will fetch some money, even if it’s toxic junk!

 

[andal]

It will be a long bumpy journey for Yes Bank to make a turnaround. Markets respects only numbers and current numbers doesn't exude any confidence.
Until new management shows some considerable turnaround may be in the next 2-3 quarters, this will be a trading stock

 

[siddhant4u]

Wait and watch policy for banking anf NBFC sector this year. Can of worm is opened. It was just Jet, IL&FS AND to some extend Zee till now. The money crunch will be felt all over soon.
Beside, provisons means bank will have less money to lend this year resulting less sales/assets/profit in 2019-20. Its a downward spiral until some merger or management overhaul happens.

And don’t forget, negative publicity means people could start taking out their deposits from yes bank too or bank might struggle to find new money at cheaper cost. Increased savings rates will soon be announced in such cases....

 

[against_tides]

The real story will be unfolded once RBI provides the data as directed by SC...

 

[siddhant4u]

Its public right to know willful deafualters at least in public funded banks...

 

[siddhant4u]

https://www.moneycontrol.com/news/b...ne-for-the-indian-banking-system-3914961.html
...
Now, Yes Bank has unveiled a watchlist of Rs 10,000 crore. It has proactively made a contingent provision of Rs 2,100 crore towards these ‘stressed but performing’ accounts. According to Morgan Stanley, even this appears optimistic because Yes Bank’s loan book has a 35 percent exposure to stressed sectors. The watch list comes after the bank reported slippages (fresh loans turning bad) of Rs 3,481 crore in the March quarter, a third of which was attributed to IL&FS and Jet Airways. So, the key question here is how did things go bad, especially within a year, since the central bank’s audit had given the lender a clean chit for financial year 2017-18?

...
Note that watch lists have to be treated with care. While they are “still performing” assets, history tells us that they have a tendency of turning sour when times are bad. In financial year 2015-16, Axis Bank reported a watchlist of Rs 22,600 crore and said only about 60 percent will turn bad. But consistent re-statement and additions to it were to the tune of 1.2 times the original size, according to Macquarie.
....

 

[iwillwin]

https://www.moneycontrol.com/news/b...ne-for-the-indian-banking-system-3914961.html
...
Now, Yes Bank has unveiled a watchlist of Rs 10,000 crore. It has proactively made a contingent provision of Rs 2,100 crore towards these ‘stressed but performing’ accounts. According to Morgan Stanley, even this appears optimistic because Yes Bank’s loan book has a 35 percent exposure to stressed sectors. The watch list comes after the bank reported slippages (fresh loans turning bad) of Rs 3,481 crore in the March quarter, a third of which was attributed to IL&FS and Jet Airways. So, the key question here is how did things go bad, especially within a year, since the central bank’s audit had given the lender a clean chit for financial year 2017-18?

...
Note that watch lists have to be treated with care. While they are “still performing” assets, history tells us that they have a tendency of turning sour when times are bad. In financial year 2015-16, Axis Bank reported a watchlist of Rs 22,600 crore and said only about 60 percent will turn bad. But consistent re-statement and additions to it were to the tune of 1.2 times the original size, according to Macquarie.
....

If interest rates are rising sell high debt/npa companies/banks....if interest rates are falling and growth is reviving in industry buy banks that grow and have good management...

 

[chintan786]

It will be a long bumpy journey for Yes Bank to make a turnaround. Markets respects only numbers and current numbers doesn't exude any confidence.
Until new management shows some considerable turnaround may be in the next 2-3 quarters, this will be a trading stock

Banks will not able to show any turnaround in coming next 5 years as well. There is almost no liquidity.
companies like Astral Pipes are finding difficult to pay against Invoices after credit period (know because we are once supplier to them). car companies cutting production by 30% (Maruti) and other are getting into some kind of collaboration with each other. Mkts are still working and they made this like this way... else MF and other industries crash over nite. Just check with SBI, since how many months they are saying "Worst is OVER"
actually it is started only recently and take monstrous time and energy to get over.

 

[chintan786]

Govt. is covering up too much.. India currently have very high rate of unemployment and this is not addressed by any govt. till date. demonetization couple with gst was last nail in the coffin of middle class, Pvt-job workers. it is not like congress can fix this... but currently genuine buyer or loan repayer is in stress.. and remain so for time being