Shares in Yes Bank, were seeing tremendous momentum in trade today rallying 6 per cent over Tuesday's close and almost 10 per cent from the intra-day lows. The shares of the bank were last seen trading at Rs 40.40.
Many investors are likely to see value in the stock, should a fund raising plan go through. The company has called an extra-ordinary meeting of shareholders for approval of fund raising plans.
While results for Q3 2020 are likely to be tepid, non performing assets are also likely to accelerate. However, what many investors are banking on is the strong brand equity that the bank enjoys. A solid franchisee and an extremely attractive price, could work in the bank's favour.
Should you buy Yes Bank shares? Is it a likely takeover target?
There were speculative reports that banks like HDFC Bank and Kotak Mahindra Bank, could be potential buyers for Yes Bank. This has of course been denied by the bank. At this stage, when the economy is in bad shape, the government may not want any bank to go bust. Yes Bank is not a small bank and is a relatively large-sized bank that cannot be allowed to fail.
This may even make a bank like State Bank of India, a potential buyer for the bank. All this of course is speculative and there are all possibilities, that the bank could also turnaround, should there be a fund infusion.
The one good thing for the bank is the strong brand equity and there would be many banks that may want to still consider a takeover.
However, if the bank does find a quality investor, which is also highly possible, the stock could soar in the coming days. At around the Rs 38 to Rs 40 levels, many investors maybe willing to take a risk. After all, market investing is all about risk. No risk, there are no returns. Watch-out for a buyout or capital infusion, the two biggest triggers for the stock.
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