Indian Stock Market News, Equity Market and Sensex Today in India | Equitymaster

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

  • MyStocks


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

Asset Sale on the Rise!
Mon, 18 Apr Pre-Open

The data published by Centre for Monitoring Indian Economy (CMIE) suggests that asset sales are slowly gaining traction. Go back three-four years and we would find that the prime object behind asset sales was to restructure operations through mergers and acquisition.

However, in recent years assets have been sold to pare the debt on the balance sheet. In technical terms it is called distressed asset sales. This is evident as the majority of asset sales has taken place in the electricity and steel sector in the preceding year. These sectors have faced maximum stress as the utilization levels have fallen to record lows.

The excess capacities built by China over the years have hurt their utilisation levels. This in turn led to dumping of goods at throwaway prices in India, thereby affecting domestic manufacturers. The heavy losses incurred by domestic manufacturers on account of poor demand have forced them to sell their assets in order to repay debt. The most recent example has been Tata Steel. The company has decided to sell its entire long product division operation in the United Kingdom (UK).

A combination of low profits and high interest costs has led to a substantial fall in the interest coverage ratios for many companies. This is one of the prime reasons behind companies either restructuring their debt or selling off non-core assets to pare the debt. Recently, Jaiprakash Associates sold its cement business to UltraTech Cement to reduce its debt levels.

Sale of non-core assets will not only help companies reduce debt but also concentrate on their core businesses. Further, the performance of the public sector banks (PSU) will also improve once companies start paying up from the sale of non-core assets.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

Read the latest Market Commentary

What else is happening in the markets today? Dig in...

Equitymaster requests your view! Post a comment on "Asset Sale on the Rise!". Click here!


Views on News

Top 5 Recent IPO Developments You Should Know (Views On News)

May 12, 2021

So far in 2021, IPOs in India have raised nearly US$ 3 bn, the best start to the year since 2018.

How Did Mindtree Perform in Q4FY21? (Company Info)

Apr 20, 2021

Here's the rundown on the company's latest quarterly results.

Parag Parikh Conservative Hybrid Fund: Should You Invest in Higher Debt Allocation? (Outside View)

May 14, 2021

PersonalFN analyses the features of Parag Parikh Conservative Hybrid Fund and explains the potential this fund has to offer to its investors.

Die Hard 4.0 Redux? (Fast Profits Daily)

May 14, 2021

A Hollywood style cyber-attack has caused shockwaves across financial markets.

What Godrej Consumer's 22% Single-Day Gain Tells About My Blueprint (Profit Hunter)

May 14, 2021

The company's FY21 earnings performance turned out better than my estimates but...

More Views on News

Most Popular

My Secret to Find Breakthrough Stocks (Fast Profits Daily)

May 7, 2021

I've used this trading technique for many years with great success. I'm sharing it with you today.

Are the Stock Markets Deaf to Covid Agony? (Profit Hunter)

May 6, 2021

Why are markets discounting the economic impact of Covid?

The Worst Sector in the Market (Fast Profits Daily)

May 11, 2021

The worst sector in the stock market according to the charts.

The Key to Profit from India's EV Revolution (Profit Hunter)

May 7, 2021

Stocks you must consider investing in before buying your first electric vehicle.


India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms


May 14, 2021 03:37 PM