Should-Investors

Should Investors Buy, Sell, or Hold Yes Bank Shares

 

The Indian Stock Exchange Market has always been dynamic, providing opportunities to both seasoned and new investors. Yes Bank has been a topic of discussion as it was on the verge of collapse in 2020. The bank’s financial position has deteriorated over the past years with losses and inadequate profits in the last four quarters.

The share value of the bank declined from Rs 400 per stock price to Rs 16.60 in March 2020 indicating a massive loss in its price. Lastly, with the intervention of the Reserve Bank of India, the bank was saved. It raised capital, got equity contributors, and improved its liquidity coverage ratio to 118% in December 2023. The bank has also entered itself into the F&O segment after 4 years indicating to the market that it has regained its financial strength and is confident about its prospects.

 

Yes Bank Share Price and Financial Analysis Today

 

  • Price: ₹20.34
  • % Change: -1.50%
  •  Market Capitalization (Mcap): ₹63,665.52 Cr
  • Revenue (TTM): ₹27,605.86 Cr
  • Price-to-Earnings (PE) Ratio (TTM): 36.18
  • 1-Year Return: -10.92%
  • Return on Equity (ROE): 2.52%

 

 

 

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The Bank has shown very slight improvement in revenue and profit growth and also lags significantly in ROE and 1-year return compared to HDFC or ICICI Bank. Moreover, the high PE ratio indicates the potential risk surrounding its ability to sustain and grow profits.

 

 

Should Investors Buy, Sell, or Hold Yes Bank Shares

 

 

With the current financial condition of Yes Bank,

  • Revenue and Profit- Yes Bank Reported Rs 27,605.86 Cr in revenue with a very slight profit of Rs 1,285.20 Cr. These figures are relatively lower than HDFC or ICICI Banks.
  • PE Ratio- Yes Bank’s high price-to-earning ratio suggests the stock is overvalued.
  • 1-Year Return- The stock has given negative returns reflecting a lack of confidence in investors.

 

Strengths

 

1. The restructuring effort, high LCR and operations stability have led to minor profits.

2. Business model post-crisis showing potential for long-term growth.

 

Challenges 

 

1.A very low Return on Equity (ROE) at 2.25% indicates an inefficient capital utilisation compared to the industry standards.

2. ⁠The high PE ratio and negative returns make it less attractive for the short term.

 

Recommendation

 

1. For existing shareholders: Hold. If the investor already owns the Yes Bank Shares, holding it might be stable as the bank is working towards stabilizing its operations. Old investors must monitor the quarterly results and improvements in metrics like ROE and growth in profit. 

2. For Potential Investors: They must avoid or wait. With the high value of weak return metrics, the investors should wait for stable financial improvements or a better price before buying.

3. Short-Term Investors: They must sell as the negative and weak performance compared to other Indian banks might not be ideal for short-term returns.

 

Is it good to buy Yes Bank shares for long term

 

Whether Yes Bank Shares are a good long-term investment depends on the risk tolerance and investment strategy of the investor. The bank shows signs of recovery with moderate profit.

 

Understanding Yes Bank’s Valuation: Trends and Future Goals

 

It has historical instability and strong competition from HDFC, ICICI, Axis and other strong banking institutions. Buying it for long-term investment will only suit the risk-tolerant investors as cautious investors always prefer stronger banks with good proven track records.

Yes Bank’s short-term outlook for 2024-2025 is cautious but again hopeful. The experts expect the banks earning will be growing slowly, from Rs 0.95 Yes Bank per share price in 2023 to Rs 1.25 per share in 2024. This slight surge is due to the excellent loan management. The investors are looking at the bank’s recovery, but its valuation is still higher than other banks. In other words, the bank is improving slowly, but the growth and other improvements will be slow.