When it came to Yes Bank, there were certainly questions over valuations. In the case of the Rossari IPO, it was in a sector that was growing and quoting at reasonable valuations. Rossari is a genuine profit making company with marquee clients representing literally, the who’s who of the corporate world. Yes Bank had also crashed more than 95% in one year.

The second challenge for Yes Bank was that the true extent of its NPA problem was still unclear. CBI investigations into promoter dealings would still be an overhang. Also, Yes Bank equity gets diluted to 2400 crore shares post the FPO. Each year, Yes Bank will have to earn Rs.2400 cr of profits to report an EPS of Re.1. That is a lot of capital flab to carry.

Apart from valuations, it was also being in the right sector. Rossari Biotech had only 10% biotech and the remaining 90% was about specialty chemicals. But even that was a hot sector as Chinese supply slump had helped out. The entire sector has valuation comfort and markets were betting on the animal proteins section picking up steam in the future.

Yes Bank had a chequered history and had just come out of a massive restructuring. Also, many retail investors in Yes Bank were not happy with the previous 3-year lock-in of equity as part of the rescue deal in March and the write-down of the AT1 bonds to Nil. Investors also worried about the likely impact on Yes Bank once the EMI moratorium was lifted.