Yes Bank was locked in 10% lower circuit at Rs.12.30 the day the follow-on public offer or FPO got listed. The listing of the new bunch of shares dilutes the equity by 100% and makes it extremely difficult for the stock price to grow. With 2500 crore equity shares outstanding, the bank has to learn Rs.2500 crore just to generate Rs.1 of EPS, which is steep task.

Yes Bank had just raised Rs 15,000 crore through FPO by issuing shares at the price of Rs 12 per share and that is where the price has converged towards. The stock has already fallen more than 54% in July after the FPO announced a 100% dilution. Rebuilding CASA deposits could be the real challenging task for the bank, although Moody’s calls it credit positive.

It is true that the successful equity raise reflects YES Bank's regained access to external market funds. However, that was largely because it had the backing of SBI. The book continues to be suspect and pulling up profits could be a huge task for the bank. While Moody’s may be optimistic on the stock, equity investors have to play it carefully.