Nazara Technologies has started an advertisement on TV channels as part of PR activities by Merchant Banker before IPO for creating the name of the brand.
This is one of the biggest beneficiaries in lockdown where people are playing games, watching movies to kill time. You would have seen an upsurge in Netflix stock on Nasdaq yesterday post the results.
Nazara is India's biggest Mobile Gaming Company
Market Leader in esports and local mobile games
61 Countries,
15 Crore Users,
2 Crore Monthly Active Users
Revenue - 167 Crores
Profit Growth - 261%
Popular Investor - Rakesh Jhunjhunwala - 180 Crore stake
IIFL - 330 Crore Stake
PreIPO available for investment. Last private placement has happened at 724 Rs./share.
Limited Stock to invest. First come first serve basis.
https://youtu.be/AQ3l2wTCmzQ
Thursday, April 23, 2020
Saturday, April 18, 2020
Wednesday, April 15, 2020
Saturday, April 4, 2020
What is YES Bank Crisis?
Crisis? Is the YES bank crisis
over? Is the depositors’ money in the YES Bank safe? What is the reconstruction
scheme of YES Bank proposed by RBI? Read this post to understand the YES Bank
story in detail and we also have a link to our video on Yes Bank for you to
explain the Crisis.
What is YES Bank Crisis?
Invested in Yes Bank? Account Holder in Yes Bank? Want to Invest?
What is YES Bank
Crisis? Is the YES bank crisis
over? Is the depositors’ money in the YES Bank safe? What is the reconstruction
scheme of YES Bank proposed by RBI? Read this post to understand the YES Bank
story in detail and we also have a link to our video on Yes Bank for you to
explain the Crisis.
Banks play a pivotal role in the economic growth of the
country. Failure of a bank, irrespective of the ownership, private sector or
public sector, does impact each and every one of us. Hence, neither Government
of India nor the Reserve Bank of India (RBI) never lets a bank facing financial
troubles fail.
Yes Bank Ltd, one of the major private banks in India and
4th largest bank in India, has been facing the problem of rapidly deteriorating
financial position. This forced the Reserve Bank of India (RBI) to take
immediate action in the form of a reconstruction scheme to protect depositor’s
money.
YES Bank History
Yes Bank, started in 2004, is one of the new generation
private banks that were allowed to start banking operations by Reserve Bank of
India in the post-liberalization era. The bank was founded by Rana Kapoor and
Ashok Kapur.
After 2008, the bank engaged in high risk lending, providing
loans to those companies who could not raise funds elsewhere and the chances
for loan default were very high for them.
The assets books of Yes bank showed promising growth until
2017 when the problem of Non-Performing Assets (NPAs) came into light.
How big is YES Bank?
YES bank is currently India’s fourth-largest private sector
lender.
Yes bank had deposits of ₹ 2 lakh Crores. Its total assets
including loans given are ₹ 3.5 lakh Crores.
The bank has 18000+ employees and has more than 1100
branches and 1300 ATMs.
Loans not repaid is a major concern for most of the banks in
India. These bad loans are called Non-Performing Assets (NPAs). The Gross
Non-Performing Assets of YES Bank was 7.4% of the gross advances at the end of
September 2019. It became 18.87% of the bank’s total loan book or ₹ 40,709.20
Crores at the end of December 2019.
The crisis at YES Bank started when the huge NPA issue at
YES Bank became public.
For the quarter ended December 2019, Yes Bank reported a
loss of ₹ 18,564 Crores compared to a profit of ₹ 1001 Crores in the same
quarter in 2018. The bank’s net loss would have been wider at ₹ 24,778 Crores
in the third quarter if it weren’t for a tax write-back of ₹ 6,214 Crores. In
the preceding quarter, Yes Bank had reported a net loss of ₹ 600 Crores.
Bad loans
The founder Rana Kapoor had personal connections with most
of the high-level industrialists who sought his help for loans, which went not
repaid. Some of the big defaulters to whom the bank had advanced funds included
IL&FS, Anil Ambani group, CG Power, Cox & Kings, Café Coffee Day, Essel
group, Essar Power, Vardaraj Cement, Radius Developers, and Mantri Group.
The Bad loans of Yes Bank are estimated to be around ₹
40,000 Crores (Gross NPA). While the Gross NPA was around 19% of advances, Net
NPA was around 6% of loans at the end of December 2019.
Eroded capital base
The overall capital adequacy ratio dropped to 4.2 per cent
from 16.3 per cent in the preceding quarter.
The capital base – specifically the Core Equity Tier-1 ratio
– fell to 0.6 per cent at the end of the quarter compared to 8.7 per cent in
the September quarter. The minimum regulatory requirement stands at 7.375 per
cent.
Breach of RBI mandated ratios
YES bank’s statutory liquidity ratio has breached the RBI’s
minimum requirement and so has its liquidity coverage ratio. The bank has thus
provided ₹ 86 Crores as a penalty to the central bank.
Governance Issue: Under-reporting of NPAs
It is not just that Yes Bank had NPAs, but it under-reported
NPAs which were later found out by RBI. This led to the end of the tenure of
the founder Rana Kapoor as the CEO of the Bank (2018).
Deposits vs Loans
In the last five years, the loan book grew by over four
times, but deposits failed to keep pace with loan growth. The loan book grew to
₹ 2,24,505 Crores as of September 2019, while deposits were at only at ₹
2,09,497 Crores.
Unusual increase in loans given from FY14 to FY19
As per news reports, the loan book of Yes Bank had grown
from ₹ 55,000 Crores in FY14 to ₹ 2,41,000 Crores in FY19. When overall bank
credit during the above period grew only by about 10 per cent, it unusual to
notice that YES Bank’s loan book grow by about 35 per cent.
Rumors spread through social media
Rumors spread through social media about the possible
collapse of Yes Bank when it was capable of managing its balance sheet, added
fuel to the fire. Many false news and rumors resulted in shrinking of the
deposit base of YES bank.
As on Dec. 31, 2019, the bank’s outstanding deposit base
stood reduced to ₹ 1.65 lakh Crores from ₹ 2.09 lakh Crores on Sep. 30, 2019.
The lender continues to see an outflow of deposits since Dec. 31.
The bank’s failure to raise fresh capital
As the bank had a lot of bad loans (in the tune of ₹ 10,000+
Crores), it needed fresh capital to manage its operations. The bank’s failure
to raise capital led to rating downgrades, which made capital-raising even more
difficult.
RBI moratorium
All the above factors led the RBI to conclude that there was
no “credible revival plan” from the end of YES bank and so “in the public
interest and the interest of the bank’s depositors” there was “no alternative”
but to place the bank under a moratorium.
RBI took over from YES bank board for 30 days. The central
bank appointed deputy managing director and chief finance officer of State Bank
of India, Prashant Kumar, as an administrator of the bank.
The Central Bank of India then imposed limits on withdrawals
to protect depositors.
Yes Bank Ltd. Reconstruction Scheme, 2020
Reserve Bank of India (RBI) stated that State Bank of India
(SBI) has expressed its willingness to make an investment in Yes Bank and
participate in its reconstruction scheme. Therefore, as per the powers
conferred by sub-section (4) of section 45 of the Banking Regulation Act, 1949,
the Reserve Bank of India, proposed the details of the scheme for raising fresh
capital for Yes Bank.
The authorized capital of the reconstructed bank
As per the government notification, the Authorized Capital
of the Reconstructed Yes Bank shall stand altered to ₹ 6200 Crores from ₹ 1100
Crores earlier. The number of equity shares will stand altered to 3000 Crores.
The capital of the reconstructed bank at ₹ 2 face value per share would be ₹
6000 Crores.
Authorized preference share capital shall continue to be ₹
200 Crores.
How much should the investor bank invest?
The investor bank (Eg: SBI) can purchase up to 49% in the
reconstructed YES bank. The investor bank should purchase each share at price
not less than Rs.10 (i.e at a premium of Rs.8).
So, if SBI is purchasing 49% of 3000 Crore YES Bank shares
at Rs.10 per share that would mean it will be investing ₹ 14700 Crores to
purchase 1470 crore shares of the private bank. SBI had approved an investment
of ₹ 7,250 Crores in Yes Bank by purchasing 725 Crore equity shares.
PS: The Main Investor bank (SBI) is not allowed to reduce
its holding below 26% before completion of three years from the date of
infusion of the capital.
New Investors in YES Bank
Apart from SBI, YES Bank got a lot of new investors as well.
ICICI Bank and Housing Development Finance Corporation Ltd
announced that they will be investing ₹ 1,000 Crores each in Yes Bank’s equity.
Axis Bank and Kotak Mahindra Bank will be investing ₹ 600 Crores and ₹ 500
Crores respectively. Bandhan Bank will be investing ₹ 300 Crores.
Existing shareholders own 255 crore shares, and they will
end up with a roughly 8.5% stake in the company.
The balance 41.5% stake will presumably be held by other
institutions and investors, who will need to infuse roughly ₹ 12450 Crores,
assuming the acquisition price is ₹ 10 per share.
Expected total new investment in YES Bank
The total new investment expected in YES bank in the near
future from SBI and other investors in the company is expected to be at least ₹
27,150 Crores.
Writing down of AT-1 bonds
In a separate disclosure made to exchanges, Yes Bank said
that the additional tier-1 bonds issued by the lender would need to be written
down since the bank has reached the ‘point of non-viability’ trigger.
As per Basel rules, AT-1 bonds are loss-absorbing capital
instruments and should be written down when a bank breaches certain thresholds
of core equity tier-1 capital.
The bank has ₹ 8,415 Crores in such bonds outstanding.
Is the new deal a merger of YES Bank with SBI?
No.
The current deal is not a merger with SBI rather an equity
investment by SBI in YES BANK.
PS: Merger with SBI is also a promising deal for YES Bank and
its depositors. However, the merger of the private bank with the state bank is
something which would be worked out only if the current investment deal does
not bring the desired results.
Will YES Bank be shut down?
No.
The government or RBI has no plans to do that. The deal is
not even a merger scheme, but a plan to revive the private bank to its old
glory.
Is the Yes Bank
Crisis over?
Hopefully yes, if the reconstruction scheme is properly
implemented.
From the depositor’s perspective, their hard-earned money
may get locked up for a few more weeks. However, as assured by the Finance
Minister, their deposits will be protected.
Once the reconstructed bank resumes its operations, and gets
backs the loans given, gradually YES bank may be back to normal. All we can do
now is to wait and watch.
The best possible Scheme for the reconstruction of YES Bank
The SBI investment in Yes Bank is the best deal the
capital-thirsty private bank can ask for. The presence of a credible name like
SBI is very important for a resolution.
If the deal goes as per plan, depositors of YES Bank are in
safe hands and have nothing to worry about. The survival of YES Bank is
critical to preventing a contagion in the banking industry.
Rajnish Kumar, SBI chairman sounded confident of implementing
the restructuring proposal for YES Bank before the 30-day RBI imposed
moratorium period ends. Once YES Bank was out of moratorium it would be run by
a professional team.
In our video we have discussed:
Whether you should invest in Yes Bank or not? – after Yes Bank crisis news broke out Yes Bank
shares fell sharply and touched the levels of ₹10. Whether it would be the
right time to invest in Yes Bank share or not?
What to do if already Invested? – Investors stuck in yes
Bank share at higher levels – what should they do now, is it good to exit and
book losses or there is still some chance that one could break even.
What Yes Bank account holders should do? - On March 5, the
Reserve Bank of India announced that it was superseding the Yes Bank Board of Directors
for a period of 30 days “owing to serious deterioration in the financial
position of the Bank”. But what created panic among the general public, and in
particular the deposit holders in Yes Bank, was the RBI’s decision to cap
withdrawals at ₹ 50,000 Crores.
What are the important price levels for Yes Bank stock?
How good or bad Yes Bank stock is according to Value
Investing Principles?
Is this the right time to enter in the stock from Growth
Investing point of view?
What are some of the Important tips to make money in the
stock market?
This video is useful for Investors who want to understand
the fundamental and technical analysis of Yes Bank.
Video explains the Yes
Bank Crisis, how Retail Investors are getting trapped in the sock when
Institutional Investors are exiting, NPAs and the concept of Value Investing.
Video Link: - https://youtu.be/UOxLVFTwcK8
Friday, April 3, 2020
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