Yes Bank FPO Closes on 17th July, Should you Invest?

The private sector lender bank, Yes Bank is planning to raise its follow-on public offer (FPO) of Rs 15,000 crore. Here, we have curated the details for the same:

Yes Bank FPO details

Issue Size

The bank is planning to raise the FPO of Rs 15,000 crore to meet its capital adequacy requirements. It will open on July 15, 2020, and will end on June 17, 2020. It has already filed its red herring prospectus for the same, and the investors can bid the shares in the multiples of Rs 1000.

Price Band

The board has approved the price band of Rs 12- Rs 13 per equity share. The floor price is set 50% below the current market price.

Allotment Details

The bank has kept aside Rs 200 crore for eligible employees in the upcoming FPO, at a discount of Rs 1 per equity share. The bank has reserved a minimum of 35%   for the retail employees, 15% for the non-institutional buyers, and 50% for qualified institutional buyers.

The investment banker for this issue is Axis Bank, Kotak Mahindra Bank, Citi, and Bank of America.        

Why Yes bank is raising FPO?

The bank is planning to raise this FPO to meet its capital adequacy requirements like expanding its business, supporting growth, and meeting bad loans.

Yes bank has registered a net loss of Rs 16,432.58 crore for 2019-20. Its CASR deposits have declined from Rs 73,174 crore in March 2018 to Rs 28,046.1 crore in March 2020. The net interest income has declined by 30.8% as compared to the previous year.

Should you invest in Yes Bank FPO?

Though in the current environment, the issue is rightly priced but the conservative investors should shun this issue because the bank is very aggressive in lending loans, which has resulted in the rise of NPA and stressed asset structure.  The bank is taking several steps to improve its depositor base by reducing the rates, but the retail deposit remains a challenge.

To conclude, we don’t recommend investors investing in this FPO even though it is rightly priced due to poor quarterly results and declined CAGR ratio.