Investment_ Yes BankNamaste!
Yes Bank has been a favourite stock for retail public. Due to it's penny price, it attracts a lot of retail attention.
I think it is a good time to invest in Yes Bank because of following reasons.
1. According to me, any retail person will think of Yes Bank and Idea, if he has given a choice to buy some large-cap stocks. Generally, businesses like telecom, aviation, manufacturing, automobile, etc hasn't been a good wealth creators , just look at the history.
Whereas, pharma, banks and financial institutions, services (IT) and technology, etc has been very good wealth creators. So Idea being a telecom company, it is to be avoided for now. So we have only one choice left, that is Yes Bank.
2. Yes Bank suffered a huge huge downfall in the stock prices, when a fraud of around Rs 5000 crores has been reported. The promoters provided loans to the businesses, which had weak fundamentals and without determining repayment risks.
3. RBI doesn't want people to doubt on banking system , so it ordered (SBIN and LICI on behalf of the government) and others (HDFC, ICICI) etc to save the Yes Bank. Now SBIN is the largest shareholder with 30% holding in Yes Bank.
4. Banks has been a good wealth creators, thanks to booming economy and financial system of India. So, I thoroughly think that Yes Bank stock prices will rebound.
5. The worst case scenario would be, Yes Bank to be acquired by some other private bank. I don't think it will be acquired by SBIN or any other govt owned companies, because the government is already selling its stakes in public sector undertakings.
Just look at the worst case scenario at Satyam Computers. It had been acquired by Mahindra, at a penny price after reporting "window-dressing" of financial statements. Now, it's shareholders would have got Tech Mahindra shares and it is among the good wealth creators.
Conclusion: Investment at current prices is fine. Yes Bank might be a good pick for a portfolio, along with other strong companies to maximize overall returns. Some ventures capitals generally invest in around 10 risky start-ups, 8 of them fail but 2 of them multiply the capital 20 fold, they still make good money in the end. Yes Bank has a very high reward potential due to it's current price. Making money via investing requires patience, strong self discipline, risk appetite, etc, so invest wisely.
Disclaimer: The analysis I have shared is based on my understanding and experience in the markets. Investment does not guarantee a fixed return due to volatile nature of markets and may result in a loss. Please do your analysis and/or consult your financial advisor before investing.
