X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2019 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Bhushan Steel Resolved - A New Beginning for the Indian Economy?
May 25, 2018


Talking about super investors, some of them are betting on the revival of the banking sector. With bad loans of around Rs 7.3 trillion, India's banking sector is going through a very rough phase.

The biggest losers have been public sector banks with a bad loan exposure of around Rs 6.1 trillion.

However, with the Insolvency and Bankruptcy Code (IBC), there is hope of some write backs. Last year, the RBI disclosed the top 12 loan defaulters accounting for around 25% of the total bad loans.

As the chart shows, the biggest defaulter was Bhushan Steel with bad loans of Rs 559 billion.

However, there is some good news for the banking sector. Tata Steel has emerged as a buyer of Bhushan Steel under IBC.

It has agreed to pay around Rs 352 billion to Bhushan Steel's lenders for a stake of 72.6%. This implies a haircut of around 37% for banks.

We believe, this can be a big boon for the banking sector and the Indian economy. This is expected to bring consolidation across sectors with weaker players being acquired by larger players.

Further, this will also help banks recover their bad loans to an extent and hence bring back credit growth.

We strongly believe, this can be a solution to India's 'Twin Balance Sheet' problem.

We recently recommended a company to our Smart Money Secrets subscribers which is expected to benefit immensely from the Bhushan Steel's recovery.

You can get access to Smart Money Secrets here...

Data Source: SBI Ecowrap, RBI

This Chart Of The Day was published in The 5 Minute WrapUp - A Store Manager Guided Me to This Stock with 68% Upside

Equitymaster requests your view! Post a comment on "Bhushan Steel Resolved - A New Beginning for the Indian Economy?". Click here!

  

Our Most Popular Charts

Get the Indian Stock Market's
Most Profitable Ideas

How To Beat Sensex Guide 2019
Get our special report, How to Beat Sensex Nearly 3X Now!
We will never sell or rent your email id.
Please read our Terms

MARKET STATS