Yes Bank(BSE Code 532648)

Yes! Finally, Yes Bank is coming out of the woods thrown in by the scamster Rana Kapoor. Hand holded by State Bank of India which is now the major shareholder in the company, Yes Bank has turned the corner. During the last year (FY2022), it has earned a net profit of Rs. 1066 crore in striking control to a loss of Rs. 3462 crore in the previous year (FY2021). What is more in the Q1FY2023, it has put up a healthy show with revenues amounting to Rs. 5135 crore against Rs. 4525 crore ni the corresponding quarter last year and the profit at net level has inched up from Rs. 207 crore to Rs. 311 crore.

Prospects ahead are all the more promising. Last fortnight the bank raised equity capital worth US$ 1.1 billion (Rs. 8898 crore) through funds affiliated to global private equity investors – Carlyle and Advent International. The capital riase will further bolster the capital adequacy of the bank aid its medium to long term sustainable growth objectives.

Again the company will shortly sell its NPAs to an asset reconstruction company and this will enable it to borrow more.

Three research analysts tracking, banking and finance segment of three different brokerage houses suggest that it is a time to buy Yes Bank stocks. One insists that at the current price level the down side risk is very limited and upside over at next 2 to 3 years could be substantial. Another analyst is more specific and positive. He says “Yes Bank stock price has now only to go up even if there are interim that profit booking sales. Of course, the uptrend will be slow and gradual and I will not be surprised if the stock price touches Rs. 100-mark within the next 500 days. The third suggests that discerning investors should buy at the current price and accumulate at every decline. Then one must have a lot of patience. Investment in this scrip should be only with a long-term perspective.

No one knows what will be the shape of Yes Bank going ahead. Whether it will be taken over by one of the leading banks like ICICI Bank or Kotak Mahindra Bank or will be merged with SBI or will remain as Yes Bank. Whatever happens the prospects for the bank are highly promsing. There are market rumours about a veteran banker Aditya Puri, who contributed significantly in building up HDFC Bank may joint Yes Bank.

(CMP Rs. 16.01, 52 week H/L Rs. 18/10, BV Rs. 13.60, FV Rs. 02)

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Zomato(BSE Code 543320)

Investors who had rushed with tremendous enthusiasm to subscribe Zomato IPO at a price of Rs. 76 and after getting listed at ahigh price of Rs. 116 shot up to a high of 170 are now crying over their fate as the steep fall in the price to a low of Rs. 40, eroding their wealth to the extend of Rs. 11,680 crore. Market observers and research analysts are of the opinion that the worst is over for Zomato stock price which has by now recovered some ground around Rs. 55 per share. The company which plunged into the red suffering heavy loses, is slowly and gradually improving its performance. During the Q1 FY2023, it succeeded in halving its net loss to Rs. 138 crore as compared to Rs. 294 crore in the same quarter a year ago. This follows a 68 per cent spurt in revenues to Rs. 1414 crore in the Q1 FY2023 over the corresponding quarter a year ago.

One of the reason for the steep fall in the stock price was the heavy sale of 7.8 per cent stake held by Uber Technologies in block deals to around 20 global and Indian funds including Fidelity, Franklin Templeton and ICICI Prudential. The stock price as a result has slumped by around 60 per cent during the last one year, underperforming the Sensex by 8.6 per cent. Research analysts are optimistic about the future outlook of the company as it has reported a break even. The management aims at breakeven on EBITDA latest by the first quarter of the next fiscal year.

Near term prospects for the company look good. But long term outlook is not that robust on account of stiff competition and rising demands by large hotels as well as delivery partners. According to an analyst, though food delivery is now a well-established industry but it is not a hyper-growth industry. With its diversified activities including advertisement etc. it can expect 15 to 20 per cent CAGR. Thus Zomato is a good investment but not a multibagger.

(CMP Rs. 55.45, 52 week H/L Rs. 170/40, BV Rs. 20.90, FV Rs. 01)

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IDFC First Bank(BSE Code 539437)

A septuagerian HNI (High Network Investor) who anlayse a stock and then decides to buy or not favours investment in IDFC First Bank. According to him, IDFC is a mini HDFC Bank and with a special focus on retail banking, it follows HDFC Bank and will grow in line with the peer Bank in the time to come.

Again the bank is doing very well in its performance. The loan has started the new fiscal year 2023 with a buoyant note. During the Q1 FY2023, it has recorded highest-ever standalone profit of Rs. 474.33 crore in striking contrast to a loss of Rs. 630 crore in the corresponding quarter of the last fiscal year. The increase in core operating income and fall in provisions aided the profitability with the sequential growth in profit 38 per cent. Net interest income grew by 26 per cent to RS. 2,751 crore yoy during the quarter. With 39 bps yoy improvement in net interest margin at 5.89 per cent for the quarter.

The bank has been remarkably successful in shifting its advance mix with retail focus has made a considerable in its corporate/infrastructure book. Asset quality has also improved with gross NPA/Net NPA at 3.36 per cent/1.30 per cent as compared to 3.7 per cent/1.53 per cent during the previous quarter. Provision coverage ratio (PCR) improved to 72.2 per ent and the management has now provided cost guidance of 1.5 per cent for the fiscal 2023. What is more collection efficiency has surpassed pre-Covid levels.

(CMP Rs. 44.65, 52 week H/L Rs. 54/28, BV Rs. 33.90, FV Rs. 10)

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