Is It Worth Holding Yes Bank Shares at a Price of 18 in a Long-Term Investment?
With time and good corporate governance, FinTech and corporate performance of former beleaguered YES BANK are gradually improving. It is important, however, not to confuse this progress with an immediate parity with other banks such as BOB, UB, CANARA, and various private sector banks. The P/E multiple of 78.66X is the highest amongst all banks. This has positively impacted the stock’s price momentum, not only since October 23 but also due to growing expectations of higher growth multiples due to a lower base.
Investment with Reason
Intelligent investors need to make decisions wisely. While the surge in the stock price, spurred by NIFTY BANK’s new heights, is indeed prosperous, excessive hope, even in the long run, should not be placed on this single stock. Still, it is expected that the investment will continue to generate positive alpha in upcoming financials.
Strategic Buying and Selling
Given your current purchase of Yes Bank shares between 18-19, multiple strong support levels exist. These levels will only be broken if the entity experiences a significant downturn. Should the company continue to show good results, these support levels are likely to strengthen over time.
However, for optimal returns, one should consider booking profit at 21 Rs. An alternative investment in fundamentally and technically strong banking stocks like Bandhan Bank or sectors such as SJVN, CESC, and SBI might be more prudent.
Future Prospects and Current Trends
As of now, if the stock price remains above 18.4, it is positively trending (bullish). But it could take several months to reach a price above 15 Rs. Do not hold the stock solely due to the share price fluctuations.
Understanding that share price movements largely depend on investor emotions, one cannot accurately predict these fluctuations, even with the wisdom of successful investors like Warren Buffet. Excluding external noises, share price movements can be reasonably predicted by the company’s performance. Recent improvements in YES BANK’s business and management strategies suggest positive potential for future growth.
Conclusion
Currents trends and positive signals indicate that holding Yes Bank shares might be a wise move. However, it is recommended to implement a buy-on-dip strategy to minimize risk. For long-term investments, it is advised to buy Yes Bank shares at 19. For short-term gains, one should wait for price corrections.