PROJECT SUBMISSION

CORPORATE GOVERNANCE AND FINANCE

YES BANK SHARE

ANALYSIS

Submitted by:
Nikhil Goyal
Class: BBA LLB Division: A
PRN: 17010224047

of Symbiosis Law School, NOIDA

Symbiosis International (Deemed University),

On
12th
August 2019
Under the Guidance of
Prof. Siddharth Kanojia

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 CERTIFICATE

The project entitled “YES BANK SHARE ANALYSIS” submitted to the Symbiosis Law School,
Noida for Property Law as part of Internal assessment is based on my original work carried
out under the guidance of Prof. Siddharth Kanojia from 3 rd July, 2019 to 12th August, 2019.
The research work has not been submitted elsewhere for award of any degree.

The material borrowed from other sources and incorporated in the thesis has been duly
acknowledged.

I understand that I myself could be held responsible and accountable for plagiarism, if any,
detected later on.

Nikhil Goyal

12th August, 2019

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 ACKNOWLEDGEMENT

With my deepest appreciation, I would like to thank Professor C. J. Rawandale and Assistant
Professor Siddharth Kanojia for providing me with the opportunity to do this research project
on Yes Bank Share and for their consistent guidance and support.
Without their consistent motivation and assistance, it would not have been possible to make
this project.
Moreover, I would also like to express my sincere gratitude towards Symbiosis Law School,
Noida for providing me a congenial learning environment to do my project.
Furthermore, I would like to thank the library staff for helping me in completing this project
successfully by helping me finding the necessary books and resources and finally, I would
like to thank my parents whose constant prayers and guidance has always been the biggest
motivating source in my life.

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 INDEX
Content Page Number
About security 5

The Management 5

Performance of Security 7
External Factors that Influenced the
Rise and Fall of Prices in the Market 10
(in preceding 7 years)
Internal Factors that Influenced the
Rise and Fall of Prices in the Market 12
(in preceding 2 years)
Conclusion 14

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 NIKHIL GOYAL - YES BANK

About Security
- Name of the company - Yes Bank
- Sector - Private Financial Bank
- Year of incorporation - 2003(November 21)
- Year of IPO - 2005(June)

The Management
- Number of Directors - 11
- Name of Directors:
Name Designation

Ravneet Gill (Managing Director and CEO)

Brahm Dutt (Non Executive Part Time Chairman)
Pratima Sheorey (Independent Director)
Uttam Agarwal (Independent Director)
T S Vijayan (Independent Director)
Maheswar Sahu (Independent Director)
Anil Jaggia (Independent Director)
Ravinder Kumar Khanna (Non-Executive Independent Director)
Shagun Kapur Gogia (Non-Executive Independent Director)
R Gandhi (Non-Executive Independent Director)
Subhash Kalia (Non-Executive Independent Director)

- Number of Women Directors – 2

- Name of Women Directors:
1. Pratima Sheorey (Independent Director)

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 2. Shagun Kapur Gogia (Non-Executive Independent Director)

- Description of Committees
1. Audit Committee
Mr. Uttam Prakash Agarwal (Chairman), Independent Director
Mr. Brahm Dutt , Independent Director
Mr. Subhash Kalia, Non-Executive Non-Independent Director
Mr. Anil Jaggia, Independent Director
Dr. Pratima Sheorey, Independent Director
Mr. R Gandhi , Non-Executive Non-Independent (RBI Director)

2. Risk Monitoring Committee

Mr. Subhash Kalia (Chairman), Non-Executive Non-Independent Director

Mr. Brahm Dutt, Independent Director
Mr. Ravneet Gill (Vice- Chairman), MD & CEO
Mr. R Gandhi , Non-Executive Non-Independent (RBI Director)

3. Stakeholders Relationship Committee

Mr. Maheswar Sahu (Chairman), Independent Director

Mr. Uttam Prakash Agarwal, Independent Director
Mr. T. S. Vijayan, Independent Director

4. Fraud Monitoring Committee

Mr. Ravneet Gill (Chairman), MD & CEO

Mr. Subhash Kalia, Non-Executive Non-Independent Director
Mr. Uttam Prakash Agarwal, Independent Director
Mr. Anil Jaggia, Independent Director

5. CSR Committee

Mr. Brahm Dutt, (Chairman), Independent Director

Mr. Maheswar Sahu, Independent Director
Dr. Pratima Sheorey, Independent Director
Mr. Ravneet Gill,  MD & CEO

6. Service Excellence, Branding and Marketing Committee

Dr. Pratima Sheorey (Chairman), Independent Director

Mr. Maheswar Sahu, Independent Director
Mr. Anil Jaggia, Independent Director
Mr. Ravneet Gill,  MD & CEO
Mr. R Gandhi , Non-Executive Non-Independent (RBI Director)

7. IT Strategy Committee

Mr. Anil Jaggia (Chairman), Independent Director

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 Dr. Pratima Sheorey, Independent Director
Mr. Maheswar Sahu, Independent Director
Mr. T. S. Vijayan, Independent Director
Mr. R Gandhi , Non-Executive Non-Independent (RBI Director)

8. Capital Raising Committee

Mr. Ravneet Gill (Chairman),  MD & CEO

Mr. Subhash Kalia, Non-Executive Non-Independent Director
Mr. Brahm Dutt, Independent Director
Mr. T. S. Vijayan, Independent Director

9. Board Credit Committee

Mr. Brahm Dutt, Independent Director

Mr. Subhash Kalia, Non-Executive Non-Independent Director
Mr. Maheswar Sahu, Independent Director
10. Committee on Willful Defaulters and Non-Cooperative Borrowers

Mr. Ravneet Gill (Chairman), MD & CEO

Mr. Uttam Prakash Agarwal, Independent Director
Mr. Subhash Kalia, Non-Executive Non-Independent Director
Mr. Anil Jaggia, Independent Director

11. Nomination and Remuneration Committee

Mr. T. S. Vijayan, Independent Director

Mr. Subhash Kalia, Non-Executive Non-Independent Director
Mr. Brahm Dutt, Independent Director
Mr. R Gandhi , Non-Executive Non-Independent (RBI Director)

12. Committee of Independent Directors

Mr. Brahm Dutt

Dr. Pratima Sheorey
Mr. Uttam Prakash Agarwal
Mr. T.S. Vijayan
Mr. Maheswar Sahu
Mr. Anil Jaggia

Performance of Security
- Overall Performance Since IPO

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 Share Price from 2005 to 2008 was in the price range of Rs. 12 to Rs. 50. In 2008 it saw a
steep decline and ultimately hit its all time low of Rs. 8 in 2009.

Share then saw a consistent gradual increase and finally reached its peak at Rs. 393 in 2018,
after which it fell sharply.

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The share is currently trading between the price range of Rs. 80 to Rs. 90.

- Decade Wise Cascading

Yes Bank Share increased by more than Rs. 370(1435%) from 2008 to 2018 as
shown in the graph. Holding of 10,000 Shares of the company would have
resulted in profit of Rs. 37,00,000 on selling plus yearly dividends.

- Performance during financial crises (Subprime – 2008)

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 Effects of financial crises could be seen on the share of yes bank from march, 2008
when it declined sharply. Share were trading at around Rs. 50 in February, 2008 after
gradually increasing and fell down to Rs. 8 after the crises.

External Factors that Influenced the Rise and Fall of Prices in the Market (in preceding
7 years)
- News and Policy Formulation
Banks are highly regulated as they take deposits from the public. Banks in India have
to maintain reserves in the form of SLR (Statutory Liquidity Ratio) and CRR (Cash
Reserve Ratio). The government is the single largest owner of bank stocks. Hence the
macro noise levels around the banking sector are high. The sector is affected by
policy actions by the regulator the RBI, levels of inflation in the economy, deposit
growth, credit off take, system liquidity, government policy decisions, FII flows into
the sector etc. Let us look at how each such macro factors affect bank stock prices.
Banks have to maintain 24% of their net demand and time deposits (NDTL) in
government bonds as SLR and 6% of their NDTL as cash balance with the RBI as
CRR. Banks earn risk free rate of interest on SLR while they earn nothing on CRR. At
present government bond yields are at around 8%. Banks profitability depends on a)
movement of government bond yields and b) cost of their funds. If government bond
yields move up, the inference is that the value of banks holdings in government bonds
falls.

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However, as banks can hold government bonds at cost (to the extent of SLR), their
profitability will fall to the extent of loss in value of banks holdings in government
bonds over and above the SLR limit. The reverse is true when government bond
yields move down, then banks profitability moves up to the extent of their excess
SLR.  The second factor is the cost of funds for the banks. If banks cost of funds is
lower than government bond yields, banks make money in the form of positive
difference between the borrowing rate and the lending rate.

At present banks are raising deposits at over 8.5% levels while government bond
yields are at 8%. Banks are actually earning negative interest rates on their
incremental investments in government bonds, which is not good for the profitability
of the banks. Investors should closely watch movements in government bond yields
and the cost of funds for banks to determine the future profitability of banks.
The budget, which projected a lower than expected net borrowing for the government
for fiscal 2011-12 is positive for government bond yields and hence positive for bank
stocks. However, if there is a threat of additional supply due to higher subsidy outgo
on account of high oil prices, then it is negative for bank stocks. Oil prices ruling at
high levels of USD 115/bbl is negative for banks.

The RBI tries to control the liquidity in the system using CRR as a tool. CRR is a cost
for banks as it does not earn any interest. If the RBI increases CRR, then banks cost
increases as they have to keep more cash as reserves with the RBI. Banks liquidity
also decreases and they will have that much less to lend. This affects the profitability
of banks. The reverse is true in case of CRR being reduced which leads to an increase
in the profitability of banks.
In the last one year, the RBI has raised policy rates of repo and reverse repo as well as
CRR to bring down inflation expectations. The policy rate hikes has raised cost of
funds for the banks as well as taken up government bond yields, and this has led to
expectations of banks profitability decreasing. Banks stocks initially did not react to
RBI policy moves hence the fall from highs was large. Going forward, inflation
expectations are still high and RBI is expected to raise policy rates further, which is
negative for bank stocks.

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 Banks profitability is dependent on many other factors. Banks earn from raising
deposits and lending to the economy, banks earn fee income from services and
transactions rendered and banks earn from treasury. High deposit growth coupled with
high credit growth is good for bank stocks as it improves the profitability of banks.

However if credit growth is excessive (as seen in the 2005-07 period when credit
grew in excess of 25% consistently with real estate forming at least 30% of
incremental credit growth) it is seen as risky. Banks suffer from non repayment of
loans when the economy turns bad as seen in the real estate sector debacle in the post
2008 crisis period.

Rising default on loans eat into the bank.

Internal Factors that Influenced the Rise and Fall of Prices in the Market (in preceding 2
years)
- Mergers and Acquisitions
Yes Trustee Limited
Yes Bank, Asset Limited Arm
Yes Securities(India) Limited
Eveready(9.47%)

- Corporate Actions

Stock Split:
26.07.2017 Old FV-10 New FV-2

Dividents Declared
03.06.2019 100%
04.06.2018 135%
29.05.2017 120%
30.05.2016 100%
21.05.2015 90%
29.05.2014 80%
23.05.2013 60%

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- Change in Management

Yes Bank new CEO Ravneet Gill is looking to replace the entire top management of
the lender, including some of ousted founder Rana Kapoor’s trusted aides, to remedy
corporate governance lapses, and lax risk management and credit disbursal policies
that were pointed out by the central bank last year, three people directly aware of the
development said.
The executives whose replacements are being considered by Yes Bank include Rajat
Monga, group president; Rajiv Anand, group president and national head of corporate
finance; Raj Ahuja, group chief financial officer; Kumar Padmanabhan, chief
operating officer; and Ashish Agarwal, chief risk officer.

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Conclusion

Yes Bank’s result for Q4FY19 under the leadership of new CEO was a reflection of
management’s shift towards conservative approach and re-building the credibility of
the bank. It has reported a loss of Rs 1507 cr, largely due to higher provisioning made
during the quarter. The bank has made contingent provision of Rs 2100 cr towards a
loan book of Rs 10,000 cr which was identified as stressed. These assets come under
the corporate segment and include 5-6 accounts from real estate, infra, media &
telecom sector.
In Stock Market Patience is required as an investor. If we trust Fundamentals and
growth prospects we need not to worry about short term downfalls. The investment in
Yes bank should be for long term. There is no chance of any fall as its already trading
at a discounted price of QIP. Now, their strategy is to use the capital to raise its
valuation and again bid for fund raising after 3-4 months. So, no downside can be
expected or all the institutions will buy shares in huge volume at lower price which
will be a loss for YB.

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