Bajaj Auto Q2FY25 Financials: Strong Revenue and Profit Growth, Margins Improve

Stock trading is the process of buying and selling shares of companies to make a profit. It might sound complicated at first, but once you understand the basics, it becomes much easier to grasp. In this blog, we'll walk you through the essentials of stock trading, the different types of stocks, how the stock market works, and the benefits of trading stocks.

To understand stock trading thoroughly, first, you have to understand the basics of stocks and the stock market.

Stock

A stock, also referred to as equity, represents ownership in a corporation. Owning stock entitles the stockholder to a portion of the corporation's assets and income, proportional to the number of shares they possess. These units of stock are called "shares."

In other words, in order to raise money to run their businesses, corporations issue (sell) stock. Depending on the type of shares held, the shareholder who purchases stock also purchases a portion of the corporation's assets and profits. In essence, a shareholder now owns stock in the corporation issuing the stock.

Types of Stock

There are two main types of stocks:

Common Stock:

• This is the most common type of stock.
• Owning common stock gives you voting rights at the company's shareholder meetings.
• You can benefit from dividends (a share of the company’s profits) and the increase in stock price.

Example: You buy 100 shares of ABC Corporation's common stock at ₹100 per share. As a common stockholder, you get to vote on important company matters at the annual shareholder meeting. ABC Corporation announces a dividend of ₹10 per share, so you receive ₹1,000 in dividends. Additionally, if the stock price rises from ₹100 to ₹140 per share, your investment value increases from ₹10,000 to ₹14,000.

Preferred Stock:

Common stock is issued by all publicly traded firms, but only a few also issue preferred stock. The preferred stock offers its owners guaranteed dividends as well as the opportunity for price growth similar to that seen with common stock. The preferred stock dividend may be higher if a company's common stock pays dividends. 

• Preferred stockholders usually don't have voting rights.
• They receive dividends before common stockholders.
• In the event of bankruptcy, preferred stockholders are paid before common stockholders.

Example: You purchase 50 shares of XYZ Corporation's preferred stock at ₹200 per share. Unlike common stockholders, you don’t have voting rights. However, XYZ Corporation promises a fixed dividend of ₹20 per share, so you receive ₹1,000 in dividends before any dividends are paid to common stockholders. If XYZ Corporation faces financial trouble and goes bankrupt, you are more likely to get paid from the company's remaining assets than common stockholders.

What is Stock Market

The stock market is a collection of markets where stocks (shares of ownership in businesses) are bought and sold. In addition to generating and sustaining wealth for individual investors, the stock market assists businesses in raising capital to fund operations.

The two main stock exchanges in India are the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

Understanding Stock Trading

Stock trading is a type of investment that puts short-term profits ahead of long-term gains. Stock trading entails buying and selling company shares in an effort to make a profit from daily price fluctuations. The short-term price changes of these equities are actively monitored by traders, who subsequently attempt to buy low and sell high.

Stock traders differ from traditional stock market investors in that they take a short-term perspective rather than a long-term one.

While buying and selling individual stocks can result in quick profits for those who time the market right, there is also a risk of suffering significant losses. Unlike the market as a whole, a single company's fortunes can rise faster but could tumble just as quickly.

If you do have the funds and are interested in learning how to trade, Swastika Investmart has made it easy for you to quickly trade stocks from your computer or Smartphone.

Benefits of Stock Trading

Many investors over the years, whether beginner or experienced, have made considerable profits by strategizing and investing in equities. The fact that some investors' success formulas didn't work at all, however, causes everyone to pause before investing in stocks or entering the stock market. There are greater chances of profiting from investments when an investor makes the right and proper judgments.

The stock market is, after all, extremely volatile. But compared to other investments, stock investing has a number of significant advantages.

Potential for High Returns:

• When compared to other investment options like bank FDs, investing in stocks has the potential to produce substantial returns in a short amount of time.
• Stock trading can provide substantial returns in a short period, especially if you invest in the right stocks.

Flexibility to Invest Small Amounts:

• You don't need a lot of money to start trading. You can buy small quantities of stocks based on your budget.
• Another significant benefit of investing directly in stocks is that investors can make their own purchasing decisions and are not required to make a certain monthly investment.

Hassle-free buying and selling process

• All investors can buy and sell stocks using a simple approach. Stock purchases can be made online, through a financial advisor, or through a broker.
• To open a demat account and begin trading, barely takes any time at all. An investor can quickly buy and sell stocks online without having to travel, and the proceeds are immediately credited to their bank account.

Continuous and Easy Transactions

• When an investor buys stock in a specific company, they are essentially acquiring a share in that business. As a result, buying stocks will provide investors with a sense of ownership.
• Having ownership entitles them to shareholder status and a significant voice in corporate decisions. Additionally, investors will have a voice in corporate choices.

Dividend Perks

A dividend is a payment made by a firm to its stockholders. In simpler terms, it is the yearly additional revenue that every company pays to investors.

• Owning stocks gives you a sense of ownership in the company.
• You can earn dividends, which is a portion of the company’s profits paid to shareholders.

Investment Profits

• The opportunity to increase one's income is one of the main advantages of stock market investing. The values of a specific stock may increase or decrease over time if the value of the stock market increases.

Liquidity:

• Stocks are highly liquid investments, meaning you can quickly buy and sell them.

Diversification:

• Stock trading allows you to diversify your investments across different sectors and companies, reducing risk.

How Does Stock Trading Work?

Stock trading works through exchanges. Here’s a simple process of how trading happens:

1. Opening a Demat and Trading Account:some text
   • To start trading, you need to open a demat (dematerialized) account and a trading account with a brokerage firm.
2. Placing Orders:some text
   • You can place buy or sell orders for stocks through your trading account.
3. Order Execution:some text
   • Your order is then matched with a seller or buyer on the stock exchange.
   • Once matched, the transaction is executed.

Risks of Stock Trading

While stock trading can be profitable, it also carries risks:

1. Market Volatility:some text
   • Stock prices can fluctuate widely due to market conditions.
2. Potential for Losses:some text
   • There's always a risk of losing money, especially if the company performs poorly.
3. Emotional Decision-Making:some text
   • Traders may make impulsive decisions based on emotions, leading to losses.

Conclusion

Stock trading can be an excellent way to grow your wealth, but it's essential to understand the basics and the risks involved. By learning how the stock market works, the types of stocks available, and the benefits and risks, you can make smart decisions and potentially achieve your financial goals.

If you're interested in starting your stock trading journey, consider opening an account with a Swastika Investmart, which offers easy-to-use platforms for trading on both computers and smartphones. Happy trading!

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About the Company

Fusion Micro Finance Ltd (FMFL), founded in 1994, provides financial services to women entrepreneurs from economically and socially disadvantaged backgrounds. Its network and services have increased access to formal credit (loans) at low-interest rates, ultimately improving the lives of people in rural India. FMFL provides financial assistance as well as financial literacy classes.

FMFL operates on a joint liability group-lending concept, in which a small group of women (5-7 members) guarantees each other's loans. The firm has largely focused on strategic regional diversification with a rural emphasis, embracing technology for development, nurturing and developing staff, and risk management.

Fusion Micro Finance Limited IPO

IPO DateNov 2, 2022 to Nov 4, 2022Listing Date[.]Face Value₹10 per sharePrice₹350 to ₹368 per shareLot Size40 SharesIssue Size[.] shares of ₹10(aggregating up to ₹1,103.99 Cr)Fresh Issue[.] shares of ₹10(aggregating up to ₹600.00 Cr)Offer for Sale13,695,466 shares of ₹10(aggregating up to ₹[.] Cr)Issue TypeBook Built Issue IPOListing AtBSE, NSEQIB Shares OfferedNot more than 50% of the Net OfferNII (HNI) Shares OfferedNot less than 15% of the Net OfferRetail Shares OfferedNot less than 35% of the OfferCompany PromotersThe promoters of the Company, namely, Devesh Sachdev, Creation Investments Fusion, LLC, Creation Investments Fusion II, LLC and Honey Rose Investment Ltd

600 crore fresh equity shares will be issued in Fusion Microfinance IPO. Apart from these, an offer for sale (OFS) of 13,695,466 equity shares by promoters and existing shareholders is included. Devesh Sachdev, Mini Sachdev, Honey Rose Investment Ltd., Creation Investments Fusion, LLC, Oikocredit Ecumenical Development Co-operative Society U.A., and the Global Financial Inclusion Fund.

Objects of the Fusion Micro Finance Limited IPO

The issue comprises OFS and Fresh Issue. Net Proceeds from Fresh Issues will be used to Augment the capital base of the Company.

Fusion Micro Finance Limited IPO financials

• The company's revenue increased at a 16.92% CAGR from Rs.720 Cr in FY20 to Rs.1151 Cr in FY22.
• Profit after tax fell from Rs.69.61 Cr in FY20 to Rs.21.76 Cr in FY22, owing mostly to an increase in the impairment cost on financial assets.
• The operating margin fell to 4.7% in the previous fiscal year from 19.7% in FY20.
• As of June 30, 2022, the company's Gross GNPA was 3.67%, while its Net NPA was 1.35%.

Competitive Strengths

• Broad and Diversified Pan-India Presence.
• Proven execution skills with a strong rural focus.
• Access to Diversified Capital Sources and Effective Asset Liability Management
• Proven execution skills with a strong rural emphasis.
• Access to diverse financing sources and effective asset liability management
• Strong underwriting and risk management policies.
• A cutting-edge technological operating model.
• Stable and experienced management team backed by prominent investors.

Risk Factors

1) In the previous three years, company margins have been declining. Profits in FY20 were Rs 69.6 crores, compared to Rs 21.8 crores in FY22. Despite a rise in revenues, a decline in margins is a major issue.2) OFS receives Rs 504 crores from the total IPO proceeds, while the firm receives nothing.3) A Covid epidemic has previously harmed the industry. Such pandemics are unpredictable and may have an influence in the future.4) An increase in NPAs might have an impact on the firm.5) The microfinance business in India confronts specific risks owing to the borrowers it serves, which are not often connected with other types of lending.

Outlook & Valuation

The microfinance industry has recorded healthy growth in the past few years, with microfinance lenders emerging in good numbers. Fusion Micro Finance is one such company that is among the top 10 NBFCMFIs in India. It offers loans to women entrepreneurs. Its business runs on a joint liability group-lending model, wherein a small number of women form a group and guarantee one another’s loans. The company works with a strong focus on rural areas and has a well-diversified and extensive pan-India presence. The company also has access to diversified and recognized sources of capital and has a good financial track record. Although this company's margins are now in declining mode and it is facing risk due to the category of borrowers it serves, an increase in the level of NPAs could also be a concern for the company. Secondly, the company demands a price-book (P/B) multiple of 1.8 on a post-IPO basis, whereas its peers like credit access command a P/B of 3.3. Thus, considering all the factors, we recommend a Subscribe rating for this issue, but only for high-risk investors with a long-term view.

GMP

According to market watchers, the shares of Fusion Microfinance are trading at a premium (GMP) of ₹24 in the gray market today. The company's shares are expected to be listed on the stock exchanges BSE and NSE on Tuesday, November 15, 2022. The allotment of shares is expected on 10 November 2022. The company has said in its draft paper that it wants to use the capital received from this issue to increase its base.

पिछले सप्ताह सोने की कीमतों में 1 प्रतिशत की बढ़त दर्ज की गई है जबकि चांदी के भाव सपाट रहे है। अमेरिकी डॉलर इंडेक्स में छोटी अवधि में हो रही गिरावट पिछले सप्ताह में थमती नज़र आई जिसके कारण कीमती धातुओं में तेज़ी सीमित रही। अमेरिका से जारी होने वाले बेरोज़गारी के दावे और रिटेल सेल्स के बेहतर आकड़ो के रहते चांदी के भाव में दबाव बना हालांकि, सोने के भाव में तेज़ी रही। अमेरिकी फ़ेडरल रिज़र्व के अधिकारियों द्वारा ब्याज दर पर आक्रामक बयान से कीमती धातुओं में मुनाफा वसूली हावी होती नज़र आई। फेड अधिकारियों ने संकेत दिए है की ब्याज दर वृद्धि की गति धीरे हो सकती है लेकिन ब्याज दर बढ़ोतरी होती रहेगी। जिससे अमेरिकी बेंचमार्क ट्रेज़री यील्ड में निचले स्तरों से सुधार रहा और अमेरिकी डॉलर इंडेक्स की गिरावट थमती नज़र आई। मजबूत रिटेल सेल्स के आकड़ो से सम्भावना है की अमेरिकी मुद्रास्फीति अपने उच्च स्तरों पर बनी रह सकती है इसलिए सेंट लुईस फेड प्रेसिडेंट बुलार्ड द्वारा 150 आधार अंको से ब्याज दर बढ़ोतरी करने की आवश्यकता जताई है। हालांकि, चीन कोवीड ऑउटब्रेक के कारण अपने सात महीनो के सबसे बुरे दौर से गुजर रहा है। यहां लॉकडाउन उपायों के कारण आर्थिक गतिविधियों में और ठंडक रहने की सम्भावना है। रूस -यूक्रेन युद्ध बढ़ने की आशंका और धीमे आर्थिक विकास से कीमती धातुओं के भाव को सपोर्ट मिला हुआ है।

तकनीकी विश्लेषण

इस सप्ताह फेड की बैठक के मिनट्स जारी होंगे जिससे कीमती धातुओं में मुनाफ़ा वसूली देखने को मिल सकती है। दिसम्बर वायदा सोने की कीमतों में 52000 रुपये पर सपोर्ट है और 53700 रुपये पर प्रतिरोध है। दिसंबर वायदा चांदी में 60000 रुपये पर सपोर्ट और 63500 रुपये पर प्रतिरोध है।

About the Company

Global Health Limited is one of the major private multi-specialty tertiary care providers in India's North and East. Cardiology and cardiac science, neurosciences, oncology, digestive and hepatobiliary sciences, orthopedics, liver transplant, and kidney and urology are among the company's major specialties.

Global Health Limited now operates four hospitals under the "Medanta" name (Gurugram, Indore, Ranchi, and Lucknow). The Medanta Institutional Tissue Repository was created in 2017 to encourage biomarker and other tissue-based research.

Global Health IPO Details

IPO DateNov 3, 2022 to Nov 7, 2022Listing Date[.]Face Value₹2 per sharePrice₹319 to ₹336 per shareLot Size44 SharesIssue Size[.] shares of ₹2(aggregating up to ₹2,205.57 Cr)Fresh Issue[.] shares of ₹2(aggregating up to ₹500.00 Cr)Offer for Sale50,761,000 shares of ₹2(aggregating up to ₹1,705.57 Cr)Issue TypeBook Built Issue IPOListing AtBSE, NSEQIB Shares OfferedNot more than 50% of the OfferNII (HNI) Shares OfferedNot less than 15% of the OfferRetail Shares OfferedNot less than 35% of the OfferCompany PromotersDr. Naresh Trehan is the company promoter.

The IPO of Global Health Limited, a company that operates and manages hospitals under the Medanta brand, is scheduled to open for subscription on November 3. According to the Red Herring Prospectus (RHP), investors can invest in this IPO till November 7. According to merchant banking sources, the size of the IPO could be around Rs 2,200 crore. Under the IPO, fresh equity shares of Rs 500 crore will be issued. In addition, 5.08 crore equity shares will be sold by the promoters of the company under offer-for-sale (OFS).

As a part of the OFS, Anant Investments, private equity major Carlyle Group and Sunil Sachdeva (jointly with Suman Sachdeva) will sell the shares. At present, Anant Investments holds a 25.64 percent stake in Global Health and Sachdeva holds 13.41 percent in the company. The funds received under this IPO will be used for the repayment of loans and for general corporate purposes.

Objective

The net proceeds of the new issuance will be used to repay debt, finance capital expenditure, fund the future acquisition of subsidiary Bio needs India, fund working capital requirements, and for general corporate purposes.

Competitive Strengths

1. Global Health Limited is the country's major provider of tertiary and quaternary health care. They also have clinical skill in addressing crucial cases that is well-known.
2. Global Health Limited has world-class facilities with cutting-edge infrastructure, medical equipment, and technology based on the most recent breakthroughs.
3. India's leading tertiary and quaternary care provider, renowned for clinical skill, particularly in dealing with complex cases.
4. Concentrate on clinical research and academia.
5. Large-scale hospitals with world-class infrastructure, cutting-edge medical technology, and medical equipment.
6. Proven track record of excellent operational and financial success.
7. Concentrate on underserved areas with dense populations, as well as the presence in major or capital cities of big states (NCR, Lucknow and Patna).
8. Opportunities for expansion in current facilities and diversification into new services, such as digital health.
9. Skilled senior management with significant institutional shareholder backing.

Risks

1. The firm's revenue is concentrated in the country's north and east, and any substantial change in geographic or economic conditions at these rates would have a direct impact on the company.
2. The firm is also vulnerable to the inherent risks of being in the healthcare industry, as well as any legal threats.
3. The company's total income, earnings per share ("EPS"), net asset value ("NAV"), return on net worth ("RoNW"), net profit margin, and return on capital employed ("RoCE") may be lower than those of some of the listed comparable industry peers, as may its price-to-earnings ("P/E") ratio, enterprise value ("EV") to EBITDA ratio, and market capitalization to total income ratio.
4. Its subsidiaries, MHPL and GHPPL, have suffered losses in the previous fiscal years.
5. Currently operates just five hospitals and six multispecialty clinics, which account for nearly all of its income. Inability to attract/retain physicians, nurses, and other healthcare personnel.

Global Health Financials

Over the fiscal years 2017-22, the Indian healthcare delivery industry is expected to develop at a 10-12% CAGR to a value of roughly Rs. 5 lakh crore. Furthermore, with strong sector macros such as lower hospital bed density in relation to population, lower expenditure on healthcare infrastructure as compared to developed and several developing countries, rising income levels & increasing affordability for healthcare services, and the government's Ayushman Bharat scheme, the healthcare delivery market is expected to grow at a 13-14% CAGR over FY22-26E to reach Rs. 8.3 lakh cr.

Outlook & Valuation

With long-term structural factors supporting growth, renewed impetus from PMJAY, and the government's focus shifting onto the healthcare sector, the healthcare delivery market is expected to grow at 13–15%. GHL is one of the largest private multi-specialty tertiary care providers operating in the North and East regions of India and operating under the most popular healthcare brand Medanta. It has generated strong revenue growth in the last 3 years, with a minor setback in FY21. Coming to the offer, the major proportion in this issue is the offer for sale, which could be a limiting factor in this issue. The promoter shareholding would come down to 33% post-IPO, which is another concern; nevertheless, the issuer has good patient volumes and cost efficiency, and its financial profile also shows an increasing trend. Finally, the issue is fairly priced at a P/E of 43 as compared to the average industry P/E of 51.93. Thus, we recommend a Subscribe rating for the long term.

GMP

According to IPO Watch, the grey market premium (GMP) for the Global Health IPO is now rs 25 per share. This suggests that the stock will most likely be offered at 361, a 7.44% premium to the IPO price.

Listing Date

The company's shares will be distributed to winning bidders on November 11, and refunds will be issued on November 14. Shares will be credited to the successful bidders' Demat accounts by 15 November, and the stock will begin trading on the stock markets on 16 November.

About the Company

Bikaji Foods International Limited is a leading fast-moving consumer goods ("FMCG") brand in India. The product range consists of six major categories: bhujia, namkeen, packaged sweets, papad, western snacks, and other snacks, which principally comprise gift packs (assortment), frozen food, mathri range, and cookies. They sold over 250 items under the Bikaji brand in the six months ending September 30, 2021. Shiv Ratan Agarwal, Deepak Agarwal, Shiv Ratan Agarwal (HUF), and Deepak Agarwal are the company's promoters (HUF). The category allocation for qualifying institutional buyers is 50.0%, 15.0% for non-individual investors or high net worth individuals, and 35.0% for retail investors.

Bikaji Foods International Limited IPO

Opening Date03, November 2022Closing Date07, November 2022Refund Initiation14, November 2022Listing Date16, November 2022Face Value₹1 per equity share IPO Price Band₹285 to ₹300 per equity share Minimum Order Quantity50 Shares Issue Size₹881.22 Cr

On Thursday, Bikaji Foods launched an initial public offering (IPO) to obtain funds up to Rs 881 crore. The IPO Bikaji is purely an offer for sale (OFS) by existing shareholders, which means the company would get no proceeds from the transaction. Fresh shares will not be issued in this.

For three trading days till November 7, Bikaji Foods shares will be available for bidding between 10 a.m. and 5 p.m. The IPO consists of an offer for sale (OFS) of approximately 2.94 crore equity shares by promoters and existing shareholders. Bikaji Foods raised 262.11 crores from 36 anchor investors ahead of its IPO on November 2.

Bikaji Foods said in a BSE filing that it has finalized the allocation of 87.37 lakh equity shares to anchor investors after consulting with merchant bankers. These shares were offered to anchor investors for $300 each.

Objective of the Issue

Receive the advantages of listing equity shares on stock exchanges.

Bikaji expects the listing to enhance company exposure and brand image while also offering a public market for equity shares in India.

Financials

Bikaji's revenue from operations grew 22.90% to Rs. 1610.96 crore for fiscal 2022 against Rs. 1310.75 crore for fiscal 2021, primarily due to increase in the sale of food products, and an increase in volume and realization of products, in particular, bhujia, Namkeen, papad, western snacks, and packaged sweets, while its net profits stood at Rs 76.03 crore in FY22. For the three months ending June 30, 2022, revenue from operations stood at Rs 419.16 crore and net profit was Rs 15.70 crore.

Strengths

• Bikaji is a well-known pan-India brand that focuses on a varied variety of quality goods, authentic ethnic Indian flavor, creative packaging, and smart pricing strategies that cover all important price points.
• The firm offers a diverse product range targeted at various consumer categories and marketplaces, with over 300 products now available.
• It has a large distribution network in India, with 6 depots, 38 super stockists, and 416 direct and 1,956 indirect distributors.
• BFIL has seven functioning production plants, including four in Bikaner (Rajasthan), one in Guwahati (Assam), one in Tumakuru (Karnataka), and one in Muzaffarpur (Bihar).
• Experienced and well-qualified promoters and senior management team with a proven track record of Consistent financial performance

Risks

• The Company will not receive any proceeds from the Offer
• Investment in unsecured debt instruments.
• Major reliance on revenue from the sale of its bhujia and family pack stock-keeping units.
• Inadequate or interrupted supply, as well as price fluctuations in raw materials and packaging materials, might have a negative impact on the business.
• Inability to sustain or grow the popularity of its "Bikaji" brand.

Outlook & Valuation

Due to shifting lifestyles, rising incomes, and urbanization, India's packaged food industry has experienced tremendous growth over the past five years. Currently, pan-Indian demand for regional snacks is booming. Bikaji is a popular brand in this segment and is among the top three Indian ethnic snack manufacturers in India with a pan-India presence. The company has a strong management team and a significant percentage of promoter holdings. It generated strong revenue growth in the last 3 years where revenue improved from Rs. 1082.9 crores in FY2020 to Rs. 1621.45 crores in FY2022. However, the company's margins are on the declining side and a P/E valuation of 95.2 looks expensive. Finally, this issue is a complete offer for sale, and thus we recommend a Subscribe rating, but only for high-risk investors.

Listing Dates

The company will finalize the IPO share allotment on November 11 and refunds will be credited to the bank accounts of unsuccessful investors by November 11. The IPO shares will be transferred to Demat accounts of eligible investors by November 14. Bikaji Foods will make its debut on the BSE and National Stock Exchange on November 16.

Introduction

Credit Suisse, one of the oldest and most significant banksin the world, has experienced substantial challenges recently. As of mid-2024,the bank's share price has significantly declined, with a drop of around 70%since the beginning of 2023. Over the last three quarters, Credit Suisse hasreported losses amounting to approximately 5 billion Swiss francs ($5.6billion), and its borrowing costs have increased due to multiple ratingdowngrades. The cost of insuring its debt has also soared to the highest levelin 16 years, surpassing levels seen during the 2008 global financial crisis.

Reasons for Its Crisis

Credit Suisse is under increased scrutiny due to a series oflosses, poor risk management, and changes in its senior leadership.

Low Deal-Making Fees

Over the past two years, Credit Suisse has faced numerouscrises and continues to strategize for recovery. The bank made $2 billion inthe first nine months of 2023, a 52% decrease from the same period in theprevious year. The new strategy likely involves further cutting back itsinvestment bank, which has caused problems, including significant losses fromthe collapse of Archegos Capital.

Failures in Risk Management

The bank has made several poor decisions in recent years. Itencouraged clients to invest $10 billion, leading to significant losses whenGreensill went bankrupt. This has increased the cost of borrowing for CreditSuisse and severely impacted its financial health.

Increasing Cost of Capital

Credit Suisse is facing higher borrowing costs, which isstraining its finances further.

Changes in Senior Leadership

The bank has had many leadership changes since 2020. CEOTidjane Thiam resigned in 2020 due to a spying scandal. His successor, ThomasGottstein, was CEO until July 2022, when restructuring expert Ulrich Koernertook over. These changes have raised investor concerns and added to the bank'sinstability.

What Options Does It Have?

Credit Suisse plans to expand its wealth managementbusiness, transform its investment bank into a "capital-light, advisory-led"business, and review options for its Securitized Products division. It may needto raise between 4-6 billion Swiss francs to reorganize and sustain growth.This could come from selling assets or issuing new shares, which might dilutecurrent shares. Another option is to seek a significant investor for a tailoredcapital raise or, as a last resort, apply for public aid.

Credit Suisse Financials

Credit Suisse has a market cap of around $8 billion andmanages $1.4 trillion in assets as of the end of Q2 2024. Its shares havedeclined by 65% over the past year. The bank operates in wealth management,investment banking, and asset management. It has reported around $5 billion inlosses and faces higher borrowing costs due to rating downgrades. In India,Credit Suisse has Rs 19,500 crore on its balance sheet as of the end of FY23.

Impact

Any new strategic plan might fail. Widening credit spreadscould increase market anxiety, lower confidence among business partners, andtemporarily raise financing costs. Over time, the decline in share price willmake it harder for Credit Suisse to raise money and reorganize its investmentbanking operations. Even in the worst-case scenario, any fallout from apossible Credit Suisse collapse would likely only have a temporary effect onIndia's financial markets, with little impact on Indian banks.

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