Retail investors give a thumbs up to Yes Bank with huge stock purchases
At present, Yes Bank is the fifth-biggest Indian stock in terms of retail ownership.
“Yes Bank could raise the required capital easily if the price point is right,” said Chakri Lokapriya, chief investment officer, TCG Asset Management Co. “In terms of valuation, it is trading at about 0.6-0.7 times the book, which is very attractive.”
Three global private equity investors were in the race to buy a substantial stake in the Mumbaibased lender, ET reported earlier this month. The talks have advanced substantially, likely resulting in one or more private equity firms taking a significant stake in the bank, the report said.
The Yes Bank stock, now trading at a price-to-book ratio below 1, was both the biggest gainer and the most active on the Nifty cash market Thursday. Yes Bank climbed 15.5 per cent to close at 47.40 on the Nifty, with more than Rs 2,000 crore worth of stock traded in the cash market alone. Next on the list of the most active Nifty stocks was Reliance, which saw trades just in excess of Rs 1,000 crore.
With the addition of new retail buyers, the strength of this category of investors in Yes Bank has increased to 13.80 lakh. That figure is higher than those for the bluest of Indian blue chips, such as Larsen & Toubro, Infosys, ITC, ICICI Bank, Tata Consultancy Services (TCS), and HDFC Bank.
At present, Yes Bank is the fifth-biggest Indian stock in terms of retail ownership. Anil Ambani’s Reliance Power, which created a record in 2008 by generating bids worth more than Rs 7 lakh crore for its initial public offer, has 30.81 lakh retail shareholders. Reliance Industries, India’s move valuable company, the country’s biggest mass lender State Bank of India, and Reliance Communications are the other three companies with more retail shareholders than Yes Bank.
Retail investors added 264 million Yes Bank shares during the quarter, while high net-worth investors bought 25.3 million. Together, they bought nearly 290 million shares of the bank in the just-concluded quarter.
Mutual fund houses increased their holding to 9.26 per cent from 6.59 per cent in the September quarter, even though overseas funds reduced their holding in the lender. To be sure, some analysts believe that valuations of Yes Bank could remain under pressure because the lender may take a couple of more years before returning to its normal earnings trajectory.
“Stress in the mid-corporate space and Yes Bank’s exposure to this could continue to pressure valuations in the medium term,” Saurabh Kumar, analyst, JP Morgan, said in a recent note to its clients.