Yes Bank: Say Yes

Yes Bank is one of the leading new age private banks and which got in the new with the failed $1 billion QIP (Qualified Institutional  Placement). The stock responded negatively to failed QIP with a close to 8% haircut and fear of a temporary overhang on the stock. The failed QIP without any changes in the underlying business could provide an opportunity to enter the stock while living with the risk of temporary overhang on the stock on account of the failed QIP. The failed QIP could lead to bigger cuts in the stock price.

So do we buy the stock?

Looking at the stock since its listing its difficult to find a reason not to buy the stock. It is a copybook example of a stock forming higher highs with higher lows.


We also like it for the fact that it has been able to consistent PAT growth.

PAT(RS Crore) PAT Growth(yoy)% PAT Growth CAGR( since FY06)
FY06 55.32
FY07 94.4 71% 71%
FY08 200 112% 90%
FY09 303.8 52% 76%
FY10 477.7 57% 71%
FY11 727.1 52% 67%
FY12 977 34% 61%
FY13 1,300.7 33% 57%
FY14 1,617.8 24% 52%
FY15 2,005.4 24% 49%
FY16 2,539.4 27% 47%

Where is the margin of safety?

Past performance is not guarantee of future performance. However the ability of Yes Bank to deliver past performance gives us some comfort. Investors who can stomach the volatility associated with the QIP failure can look to enter into the stock. We feel another attempt will be made to push the QIP in the future coupled with the business performance will provide further upside in the stock.

One thought on “Yes Bank: Say Yes

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s