Yes bank share price has fallen more than 80%; Should I buy Yes Bank Share ?

Yes bank share price has fallen more than 80%; Should I buy Yes Bank Share ?

Yes bank share was considered as one of the most promising share and was being talked about a lot in news and by the stock market experts. Since it has started falling in Mar 2019, it has now fallen about 80 % from its highs. So is it the right time to buy. Nowadays, it is in news almost every day and almost all channels are talking about it. Many people are wondering – should I dig into  this lifetime opportunity ? should I buy Yes bank share? Is it attractive at this price point? 
To answer this question, we will look at the company, its performance over the past 06 yrs, we will look into the results over past 4 quarters, its share price movements and its future prospects.
Should I buy Yes bank share
Should I buy Yes bank share ? 

Company profile

Yes Bank Limited is a private sector bank. The Bank is engaged in providing banking services, financial markets, investment banking, corporate finance, branch banking, business and transaction banking, and wealth management. Market Cap of Yes bank is 13058 Crore, hence it falls under the category of mid-cap stocks. It claims to have a pan India presence and is a 'full-service commercial bank'. It may be noted here that the market cap of major banks in India is to the tune of 3-6 Lakh crores. Yes bank is that way a comparatively small bank. 

Leadership and Management

Ravneet Gill is the Managing director and CEO of Yes Bank.  Brahm Dutt has been mentioned as the non executive part time chairman. Ravneet Gill who has taken over the reins of Yes Bank in Mar 2019, had an illustrious career with Deutsche Bank for more than two decades and is known for his management skills. He has been brought in after the Yes bank management was found to have serious flaws early this year and the Yes bank share had started plummetting. It was thought that Ravneet would be instrumental in bringing the bank back to shape. 
should I buy Yes Bank Share
Ravneet Gill, Yes Bank CEO and Managing Director

Performance of Yes bank share over the past 06 yrs

Revenues of Yes Bank have been growing consistently since 2013 and have grown from 8294 Crore in 2013 to 31011 crore for the current year (trailing 12 months revenue). The problem, however, lies in Financing profit, which is the main source of income for a bank. Yes bank's financing profits for the year ending Mar 2019 was -2021 cores (loss) and till date (trailing 12 months) is -4373 crores. Net profit (earnings) had declined from Rs 4233 crore in 2018 to Rs 1709 crores in 2019 and currently, it is at Rs -1041 crores. The same was mirrored by a fall in Yes bank share price.

Last 4 quarter results of Yes bank

If we look at the quarterly results, the financing profit and the earnings started going into negative in Sep 2018 and that is the time when the stock price had started to fall. In improved marginally in Dec 2018 quarter but thereafter, it has been consistently going down. Most retail investors continued to believe in the growth story of Yes Bank as painted by the media and continued to hold on to the stock despite signals of distress in the results. And that emotional holding on to the Yes bank share has cost dearly to many people. 

Yes bank share Price movement

The Yes bank share had a bull run from 2016 to 2018 and hit a peak of Rs 380 on 24 Aug 2018. Thereafter, it fell sharply in Sept 2018 (possibly after the news of loss) to hit a low of 208 for that month. Thereafter, it has been falling consistently and today Yes Bank Share has lost almost 80% of its value. As of today 25 Dec 2019, (Markets are closed today) it is trading at Rs 51.20. 

Cause of such fall of Yes Bank Share and other developments

There were various factors in the news being talked about as the cause of Yes Bank share price fall. The bank had disclosed that it had significant exposure to IL&FS and Jet airways through loans. When these two companies defaulted on their loans, Yes bank's profits were hit and it had huge NPAs at hand. Another incident which triggered a sharp fall was RBIs stand on the leadership. RBI directed in Dec 2018 that the bank's CEO had to be replaced immediately. This led to panic in the market and the share price further started falling. Since then, there has been a series of bad news in the market and the stock has been falling. The results in all these quarters have been discouraging too. 

But the concern is that today many investors are thinking of investing in the stock thinking that it may start rising again. There are various kinds of news in the market, every day there is new rumour of a positive change in the company instilling hopes in the minds of investors, causing buying. After a few days, there is another bad news and the Yes bank share starts falling again. In this process, the retail investors are losing money while the big players are making money utilising the fluctuations in share prices. Off late there has been a lot of speculation on Yes bank share price. 

Future prospects of Yes bank share

Nobody knows what is the future of yes bank. Nobody has seen the future. The company claims that the problems will be solved in a few quarters. There is news of various companies planning to invest in Yes bank and bail it out of the crisis. However, all this news only helps in speculation. All we have for sure is the result of Yes bank, which is bad. It is very difficult to say that it will do better in future and even if it does, it does not make sense to invest in a company which is making losses. 

Will Yes bank share rise again and be a multi-bagger ?

At this point, most of the people are thinking that the stock has become cheap and they should accumulate large amounts in the hopes that one day it will start going up and they will make millions. They feel that it is the next multibagger. However, it should be noted that a stock merely going down is no guarantee that it will go back up again. A stock goes up because of good fundamentals and the fundamentals of Yes bank share as of now do not indicate that it will go up anytime soon. 

Investment vs Gamble

People say that the stock markets are a gamble. Yes, it can be a gamble if you invest based on emotions and rumours. Betting on Yes bank share that it will go up is a Gamble ! because there is nothing as of now to suggest that it will go up. Buy Yes bank if you are ready to speculate, ie if you are ready to play a gamble and are ready to lose. 

Should I buy Yes bank share? 

Yes bank is was a hotshot stock till Aug 2018. In Sept 2018, it came out in the news that it had suffered losses due to exposure to stressed companies. Thereafter, it has been making losses and the Yes bank share price has been falling consistently. There is a negative environment around the share and fundamentals are not good. Yes, it may rise in future if all its problems are taken care of. Many companies have brought about great turnarounds in the past and gone on to be multibaggers. But playing on hope without any concrete base of such hope is a gamble. Whereas sound investing requires studying the fundamentals of a stock and basing decisions of the certainty of those fundamentals. In my opinion, retail investors should not get into Yes Bank share. They should wait till the bank turns profitable and shows incremental profits in 02 consecutive quarters and the financial stress has come down. 
Since Yes Bank share is being talked about every day in the media, many retail investors are enticed into buying this stock, only to learn after a few days that it is still falling and making new lows. There are hundreds of other stocks to invest in the market and there is a surety of return in those shares, so why not invest in them rather than Yes bank share? I hope you got the answer. 

Invest wisely. Happy investing!

Disclaimer : 

The author is not a professional stock market analyst and the opinion expressed in this post is his personal opinion, it should not be considered investment advice and the author should not be quoted for expressing his opinions. Due caution may please be exercised if you are planning to invest.