Yes Bank – My 2 Cents!!

Yes Bank announced its Q4 results yesterday. It was no surprise that the private sector lender incurred a loss to the tune of INR 3,788 crores for the quarter. While the net interest income plunged by 22.5% as compared to the quarter a year ago, provisions and contingencies came in at Rs 5,239.6 crore, up 7.5 percent as compared to the year-ago quarter. Asset quality weakened further with net non-performing assets (NNPAs), as a percentage of gross advances, rising 184 bps sequentially to 5.88 percent, while there was 5 bps sequential increase in gross NPAs.

While the current CEO, Prashant Kumar assured that the slippages going forward would be less than the cash recovery in FY22 and expects slippages to remain below INR 5.000 crores. Gross slippages at the end of March 2021 quarter stood at INR 11,873 crores.

What happens to you as an investor? Well, I had first written about Yes Bank: “PRICEy” Lessons on December 13, 2019 wherein I had asked investors to stay away from investing in the stock. The stock price was hovering around INR 45 per share during that time. My two cents back then, which continues to remain intact even today:

• “There is never 1 cockroach in the kitchen”. This was when the bank had started to report some of its NPAs graduallyin 2019. Just to give a perspective, the stock was trading at a price of INR 280/share in April 2019. With 64% market erosion in just 3 months, some investors felt that the worst is over.

• Never fight a dragon, it’s best to avoid it. There is no point trying to solve difficult problems, simply avoid them. With the stock market providing more than 4,000+ listed opportunities to choose from, there is no point wrecking your brain behind something which could be a death trap. The stock touched a low of INR 29 per share in October, 2019 and now stands at around INR 14 per share

Disclaimer: Please note that these are my personal views. While I am NOT a registered Research Analyst as per SEBI (Research Analyst) Regulations, 2014, all investors are advised to conduct their own independent research into individual stocks or industries before making any decision. In addition, investors are advised that past stock performance is not indicative of future price action.