Capitalmind with Deepak & Shray Yes Bank's Fall, Zee's Woes and Deferred Tax Assets (Ep-12)
Host Deepak Shenoy (CEO) and Aditya Jaiswal discuss about Yes Bank – The "Kohinoor" of Rana Kapoor, pledging of shares by ZEE and deferred tax assets (DTAs) in the books of private and public sector banks.
- Deepak's thoughts on Yes Bank (1:35)
- Cockroaches in Zee's Books? (5:45)
- Deferred tax assets in the books of private and public sector banks (10:00)
Read full transcript: https://www.capitalmind.in/2019/10/yes-banks-fall-zees-fall-and-deferred-tax-assets-ep-12/
Excerpts:
1. Deepak's thoughts on Yes Bank:
Why should people continue to retain deposits with the Yes bank? The answer to this is two things First of all, the bank accounts itself don't show us the kind of panic that people seem to have in their heads the deposits seem relatively safe. And to that extent, you know, if you look at the numbers that they have their INR 58,000 crores in government bonds are the 2 lakh Crore in govt deposits, that's 25% straightaway or 30% early and then they have loans worth INR 2,30,000 crores, they have another you know 10,000 crores of cash with RBI they have another INR 5000 somewhere else. So, there is essentially about 75,000 crores of very, very liquid assets that they have. They have also told us that, you know we've still seeing certain amount of rationalization in their in their loans. Even if all the BB loans were to go to zero and their current NPAs are all supposed to go to zero, they would lose roughly 20-25,000 crores this would take you know eight quarters because RBI way gives them already quarters write them down, in those eight quarters they will generate INR12-13,000 crores of profits because they have other loans which are good, there is a potential another fund raise that will come up so, at max I think even if they were to take this extreme step of where all these loans go bad, the capital ratios will still be okay...
"I don't think it's a great time for anybody to buy Yes bank stock, it's a lottery! But the chances of winning substantial amounts are very low. So I'm not really interested in the stock. I am, however, of the opinion that the deposits are safe."
2. Cockroaches in Zee's Books? (5:45)
If you look at the FII holding of ZEE, about 47% of ZEE is held by FIIs, out of which the big guys that is anybody who owns more than 1% of Zee add up to only only 19%. So, the remaining 30% of ZEE holding (held by FIIs), is held by a lot of FIIs who have less than 1% shares. Who are these FIIs? Why are there so many of them? And how come they all own these tiny little percentages of ZEE? We don't know the answer to that...
3. Deferred tax assets in the books of private and public sector banks
If you take the 22% tax regime, you can't use the deferred tax assets. Whenever you take an asset and say that as it is worthless now, because I'm going to the 22% tax regime and that tax regime does not allow me to take the deferred tax asset, I am immediately going to lose that amount...