Capital Gain

YES Bank CFO Rajat Monga has sold stock worth ₹37.5 crore in FY18 so far

With a 7.4% year-on-year increase in profit and a 26.8% increase in net interest income for Q3FY18, YES Bank has reason to cheer but its asset quality woes are far from resolved. Over the past three years, the divergence between the RBI’s and bank’s recognition of NPAs has only grown wider, with the latest assessment in October 2017 highlighting a divergence of Rs.6,355.2 crore for FY17.

While growth in advances reported a steep yearly increase of 46% and CASA ratio also reported a growth of 38% in Q3FY18 against 33.3% in Q3FY17, the quarter also saw fresh slippage of 1.2%. During the latest earnings call presentation, CEO Rana Kapoor stated that 60% coverage will be achieved on the overall GNPA of Rs.2,974 crore, no later than June 2018. The target seems ambitious, given that the provision coverage ratio currently stands at 46.3% against 66%, a year ago. Kapoor further stated that a significant part of the recent divergence in October are non-sticky NPAs and will be remedied in Q4FY18.   

Analysts are banking on this assurance, given that the stock trades at a one year forward P/B of 2.6x. Though it is down from its all-time high of Rs.383, the stock is still up 19%, over the past year. Cashing on this buoyancy CFO Rajat Monga sold stock worth Rs.10.7 crore between January 30 and February 1 at an average price of Rs.357. The disposal of 300,000 shares has reduced his stake to 0.21%. Previously, Monga had sold stock worth Rs.26.8 crore in two tranches in August and September.    

Over the past year, the promoters have pared their stake from 21.78% for the quarter-ending December 2016 to 20.04% for the quarter-ending December 2017. Domestic mutual funds meanwhile have marginally increased their stake from 11.15% to 11.27%. Aditya Birla Sun Life AMC has increased its stake from 1.84% to 2.13% while HDFC AMC disclosed a 1.03% stake along with Franklin Templeton, which bought 1.95% during the same period. 

Foreign portfolio investors have also increased their stake from 42% to 43.2%. Nomura India reduced its stake from 1.29% to 1.05%. Accompanying it was Franklin Templeton, which sold down from 2.14% to 1.6%. Vanguard entered with a 1.1% stake in September 2017 and increased it to 1.16% in December 2017. Another new entrant was Steadview that bought 1.03%.

Among insurance firms that reduced their overall stake from 12.5% to 12.25%, LIC’s continues to be the biggest holding at 8.33% after selling down from 8.99%. ICICI Prudential Life, too, bought a 1.33% stake in December 2017 while Bajaj Allianz Life, which held 1.25% in December 2016, sold down to 1.01% in March 2017 and thereafter finds no mention in the more than 1% category.