Angel Broking: Yes Bank’s FPO

Under the governments bail out plan private lender Yes Bank Ltd. had received around Rs 10,000 crore from eight financial institutions, including Rs 6,050 crore from SBI. Currently, pre-follow on public offer, SBI owns 48.21% in Yes Bank. YBL was having deposits worth Rs 2,27,610 crore as on fourth quarter for fiscal 2019, however, it dropped to Rs 2,09,497 crore in second quarter for fiscal 2020. Further, as a result of the negative news in third quarter and fourth quarter of fiscal 2020, the bank witnessed sizeable deposit withdrawal of Rs 1,00,000 crore reaching to Rs 1,05,364 crore in fourth quarter for fiscal 2020

Angel Broking believes current market price of Yes Bank is not the true reflection of fundamentals given that the reconstruction scheme had locked in 75% of all shares for 3 years, held by existing shareholders and new investors entering via the scheme. Hence brokerage believes CMP will converge around follow on public offer price, once FPO shares float in the market. However, on FPO there is no locked in period for any investor. Considering above factors brokerage recommends Neutral rating for FPO.

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