Private lender Yes Bank on Wednesday reported a 91 percent year-on-year (YoY) drop in net profit at Rs 113.8 crore for the first quarter ended June 2019. In the corresponding quarter last year, the company had posted a net profit of Rs 1,260.4 crore. The stock has fallen 64 percent in April-June.
However, the shareholding of individuals (with investment up to 2 lakh) in the bank has risen to 18.72 percent in Q1 from 11.13 percent in Q4FY19.
According to the shareholding data on BSE, shareholders with capital up to 2 lakhs have increased from 7.39 lakh in Q4FY19 to 11 lakh in Q1FY20. But holdings of individual investors with a share capital over Rs 2 lakh declined to 1.74 percent from 2.83 percent.
Foreign portfolio investors (FPI) and mutual funds have also reduced their stake in the lender, which has eroded 75 percent investor wealth in the last one year. The Q1 shareholding data showed stake of mutual funds declined to 6.59 percent from 9.54 percent at the end of the March quarter, 2019. Similarly, FPI holding dropped to 33.69 percent from 40.33 percent.
Most brokerages have already downgraded the stock and cut its price target for a 12-month period on concerns regarding eroding balance sheet strength, rising non-performing assets (NPAs), capital raising and fall in profit.
Analysts, though remaining bearish on the stock, believe that the individual shareholding has increased due to a fall in stock price. The individuals invest on the basis of price movement instead of fundamentals, and usually for a long-term, hence the investors have bought more in order to average out the price movement, they said.
For a mutual fund or an FPI, a stock falling over 20 percent in 2 days is a huge movement, but individual investors look at it as an opportunity to buy at a lower price and hold on to the stock for a period of 3-5 years, with hopes that the stock will rebound and give sufficient returns in the long-term, said an analyst who refused to be named.
Meanwhile, the stake of Life Insurance Corporation, the country’s biggest insurance company, remained almost constant in this period. It holds 8.87 percent stake in Yes Bank, as per the Q1 data.
The bank's fresh slippages at Rs 6,232 crore nearly doubled in Q1 if compared to the Rs 3,408 crore in the previous quarter, leading the gross non-performing assets ratio to rise to 5.01 percent against 1.31 percent in the year-ago period and 2.91 percent three months ago.
This is the second consecutive quarter the bank has shown a massive hit on the bottom line since the new management under Ravneet Gill took over in March after the forced exit of promoter-chief executive Rana Kapoor over governance concerns by the RBI.
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