What has changed so big in Yes Bank that it has lost nearly 85% from its peak in the last one year?

In fact, Yes Bank is the one stock that has really cracked sharply in the last few months. In fact, the correction has been much more severe after the new CEO, Ravnit Gill, took over as the CEO of Yes Bank from Rana Kapoor. The RBI had refused permission to Rana Kapoor to continue as the CEO due to serious deterioration in the quality of the assets of the bank. There are a number of reasons for the sharp fall in Yes Bank. Here are a few of them.

· After Ravnit Gill took over as the CEO of Yes Bank, the bank has opted to take huge write offs on its doubtful loan exposure leading to huge losses in the last two quarters. That has not gone down well with the investors.

· Yes Bank has revealed that it has large equity exposures to some really stressed companies like Jet Airways, IL&FS, Cox & Kings, McLeod Russell, Café Coffee Day group etc. Recently, the exposure of Yes Bank in CG Power came into question after the bank was found to have understated its liabilities by nearly Rs.1000 crore. These lax standards of lending have not gone down well with institutional investors.

· Yes Bank is badly in need of capital after the net worth got substantially eroded due to the recent losses. The bank is currently planning a QIP but the price they are demanding for the QIP is substantially higher than the market price. Even assuming that the QIP does go through at a lower price, the bank is likely to be awfully undercapitalized.

· There is also concern in the markets due to the Dollar bonds issued by Yes Bank. The dollar bonds were issued at a yield of 3.75% but are now quoting at a yield of 6.31%. Bond traders are looking at this as a likely signal of possibility of default and that has also raised some concerns among investors.

· Yes Bank needs to raise capital to the tune of nearly $2 billion in the next few months to get its capital adequacy back in shape. That looks difficult at the current price.

While the CEO, Gill, has been talking about the asset quality bottoming out, the investors don’t appear to be too convinced. Ideally markets may wait for more clarity on the capital plans and greater clarity on the asset quality. That may take some more time.

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