Yes Bank has rallied more than 300 percent after hitting a low of Rs 5.55 on March 6. The cash-strapped lender received a Rs 3,700 crore booster shot from five financial institutions along with State Bank of India (SBI). The move is likely to calm the frayed nerves of investors and depositors.
The Cabinet on March 13 approved Yes Bank Reconstruction Scheme 2020, with a higher authorised capital of Rs 6,200 crore as against Rs 5,000 crore as per RBI Draft Reconstruction Scheme 2020.
As per the contours of the scheme, ICICI Bank (Rs 1,000 crore), Axis Bank (Rs 600 crore), Kotak Mahindra Bank (Rs 500 crore), Bandhan Bank (Rs 300 crore), Federal Bank (Rs 300 crore) and HDFC (Rs 1,000 crore) will infuse Rs 3,700 crore as equity into the crisis-hit Yes Bank. State Bank of India will invest Rs 7,250 crore for up to 26 percent stake with a lock-in of three years as against the earlier envisaged 49 percent stake.
It also announced the lifting of the moratorium by 6 pm on March 18 (from April 3 earlier), the third working day after the reconstruction scheme comes into force.
So, has the private sector lender turned a corner and more importantly has become an investment play? Market experts don’t think so. They cited asset quality concerns, which could play spoilsport in the future. At best, they see it as a good trading play.
“The current moratorium on deposit withdrawal and capital infusion are just the first steps toward the revival of Yes Bank,” Emkay Global said in a recent report, maintaining its sell call on the private sector lender. The brokerage sees many more such steps for a ‘sustainable long term revival’ of the bank to ‘survive and thrive independently’.
Ajit Mishra, V-P Research, Religare Broking, too echoed the concern raised by Emkay. Mishra went a step further and advises investors to ‘avoid’ investing, especially when there are ‘a list of quality banking names available at a good bargain’.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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