In today’s briefing:
- IndusInd Bank- RBI’s Decision May Not Be a Red Flag
- The Effect of the TSE Requesting an Improvement Plan from a Company with a P/B Below 1x Is….
IndusInd Bank- RBI’s Decision May Not Be a Red Flag
- Indusind Bank (IIB IN) ‘s shares saw a sharp fall of 7% on Monday.
- The fact that RBI shortened the tenure of MD & CEO to two years baffled the market.
- Shortening of tenures by the RBI have been seen earlier also for BFSIs. The move does not explicitly indicate any fundamental deficiency, hence investors should not be too worried.
The Effect of the TSE Requesting an Improvement Plan from a Company with a P/B Below 1x Is….
- TSE will require companies with P/Bs below 1x to disclose improvement plans, urging them to shift to management that reflects an awareness of their cost of capital and stock price.
- The good thing about this TSE request is that “cost of capital” will be widely recognized by companies. Companies can no longer easily reject shareholder proposals regarding cost of capital.
- It should also be an opportunity for management to evaluate its own corporate value and compare it to market value and consider whether it should remain listed or go private.
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