Anil Singhvi salutes corporate India, says now it is easier to raise funds via equity; tells investors to buy with long-term view
The money raising process by way of equity is expensive on the pocket, but is a viable option as the NBFC and banks have been reluctant to give money. Their reluctance to lend money could be because of the situation and existing sentiments or because of lack of liquidity, Anil Singhvi says
The impact of coronavirus will be there in the April-June Quarter and it is expected that there will be setbacks, but the results are not likely to be as bad as they were expected, Zee Business Managing Editor Anil Singhvi opines. As we see the economy opening up it will augur well if the recovery sustains for the next couple of quarters, he added.
Many companies may face problems when the lockdown is fully reversed and the payment activity starts, the Market Guru further said and added that these are difficult times for businesses.
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There is a lesson to be learnt from the 2008 economic crisis and which is when the market is ready to give money, one should take it. He was indicating to a situation in 2008 when the companies had the opportunity to get money from the market but lost it because of unrealistic expectations.
This time, the corporate sector has been wise, he said. The markets are currently bullish and have liquidity. Under these circumstances, one should not lose opportunity to raise money, he said.
Singhvi further said that, under the current circumstances, it will be difficult to raise money through debt. It is easier to raise money by way of equity though the cost of equity is always higher. Companies need to earn substantially higher to pay dividend money to equity shareholders after accounting for all the expenses.
The money raising process by way of equity is expensive on the pocket, but is a viable option as the NBFC and banks have been reluctant to give money. Their reluctance to lend money could be because of the situation and existing sentiments or because of lack of liquidity.
The corporate should not mind raising the money through equity, if raising money through debt is difficult. If you are getting good valuations for your equity, nothing like it, the Managing Editor said.
The next 6-12 months will be very challenging. While he lauded the corporate sector for exploring the equity option, he also cautioned the investors against putting money in companies which are not good.
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He however, said that, if investors are putting money in any company's shares, it should be with a long term view.
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