IPO Update : Say “NO” to Yes Bank

Yes Bank IPO is hitting the markets as the Issue opens on 15th June 2005. Investment Guru recommends Investors to stay away from the IPO.

Why should I stay away from this IPO ?

1. Yes bank is new to the banking business and does not have any brand value. The success of the bank depends on the brand value it is able to create which is uncertain at this stage for this bank.
2. Yes Bank has posted a Negative EPS for the first year of its operations. This means that the bank is a loss-making bank from sharholder’s perspective.
3. There are a number of good performing private sector banks in the market generating excellent profits. Why should one apply for a loss making bank IPO, that too at a premium of 350% over the face value?
4. The bank is expected to have a tough competition with the existing well-established private and poublic sector banks and the bank has not disclosed what innovative plans it has to compete with these banks.

7 comments:

Prashant Shetty said...

Completely agree with you - no track record, other excellant options available

Prashant Shetty said...

Any ideas how come there is so much interest in this counter ? It was oversubscribed 5.5 times within 5 minutes of opening yesterday. Nearly all bids were at the high end of the band i.e.Rs 45. Also analysts on CNBC and Udayan Mukherjee himself suggested that it investors are showing confidence in the strong management and it might do well in the short term. Will this be another of those which will flare up on listing ?

Nitin Agrawal said...

Hi I am a frequent reader of your website i want to invest in ithe upcoming ipos yes bank nectar life era costructions and msp steel could you please guide me as to which one would be the best.

Rajesh Soni said...

nitin's comment
MSP
Nectar
Yes bank

Amit said...

I spent some time with the Yes Bank prospectus and found three good reasons for investing in the IPO
1. Solid track record of the promoters + sizeable Rabo Bank stake
2. Innovative approach to banking, using industry knowledge and vertical specialization as a differentiator
3. Focus on large corporate, small businesses and high net-worth customer segments (like Kotak)

However, the stock is definitely a little over-priced considering it's loss-making, very high price to book value (even higher than ICICI, HDFC and Kotak). Further, one of the initial promoters (Harkrit Singh) dropped out of the bank due to differences with the others and with Rabo Bank.

One should invest only based on faith in the bank's future prospects and senior management.

Rahul Munjal said...

When is Yes Bank expected to refund the amount and how ??

Rahul Munjal said...

Listing today !!!
Any suggestions?