Finance World

Depository receipts & their significance

Published

12 months ago

August 14, 2023

When a person wants to save then the financial market is flooded with numerous financial instruments. An investor has a wide range of options to choose from. There are options for long-term investment and short-term investments. Also, these instruments vary depending on individual risk appetite and returns earned by these instruments. We will see the financial instrument available in market

Equity stocks
Debentures/Bonds
Index funds
Mutual funds
Exchange-traded funds
Hybrid products
Derivatives
Commodities

While we will learn about all financial instruments, in this article we will choose to discuss Hybrid products and the segments in them.

What are hybrid products?

The meaning of hybrid in simple terms is the combination of 2 or more products. A hybrid process is carried out to enhance the present quality and working efficiency of the product. An example of hybrid usage in business is a hybrid business is a combination of offline store business and online store presence. Similarly in a financial market, a hybrid product is a combination of 2 or more products that possess the qualities of equities, bonds, debentures, or issued in the form of receipts. The types of hybrid products include:

Preference shares
Convertible bonds & Debentures
Depository receipts
Foreign currency convertible bonds
Equity-linked debentures
Commodity-linked debentures etc.

We will discuss more on Depository receipts in the next segment.

Depository receipts (DR)

A depository receipt is a financial instrument that holds shares of a foreign country. A depository receipt trades in the local market in the local currency of the issuing country. The major DRs available in the market are Indian Depository receipts, American Depository receipts, Hong Kong Depository receipts, and Global Depository receipts.

There are a set of steps to issue a depository receipt in a country. They are

The company which wishes to issue its shares as receipts to a foreign country has to approach a bank in the same country.
On approval, the listed company deposits its shares with the foreign bank.
The foreign bank issues depository receipts and the trader or investor can buy them and trade them in stock exchanges of the foreign country.

We will know about widely available depository receipts in the following part of the article.

Indian Depository Receipts (IDR)

The Depository receipts that are issued in India by foreign companies that have underlying foreign shares are known as Indian Depository receipts. Standard charted Bank was the first global company to file for the issue of IDRs. The procedure to issue IDRs is the same issuing as domestic shares. The issuing company has to file the draft red herring prospectus. SEBI examines it and approves it for further clearance by the registrar of companies. After all the clearances, the company markets the issue and opens it for bidding. Once bidding is over the investors are credited with shares in their Demat account.

American Depository Receipts (ADR)

The depository receipts that belong to a foreign company, but are issued and traded in the United States of America are known as American Depository receipts. If an Indian company example. Infosys wants to raise its capital through the American market then Infosys approaches the U.S.A bank. The bank after a series of verification processes, issues a negotiable certificate that has Infosys shares as underlying assets. Then this depository receipt is traded in the U.S. stock exchange as any other local domestic U.S.A share denominated in Dollars. Let us see a list of ADRs of Indian companies.

Company	Last price $	Traded volume
Infosys ADR	16.63	11.84M
ICICI Bank ADR	24.17	3.77M
WIPRO ADR	4.870	2M
Make my trip	28.16	431.37K
Dr.Reddy’s Lab ADR	67.94	183.77K
Yatra Online	2.010	36.04K
Reddiff.com India	0.0001	2.91K
Sify	2.1	274.89K
WNS Holdings	69.07	331.3K
Azure power Global	0.30	38.41K

Types of ADRs

Depending on the involvement of the foreign company issuing the shares, the ADR is classified as sponsored ADR or unsponsored ADR.

Unsponsored ADR

The Unsponsored ADRs are also issued by U.S Banks. But the companies to whom the shares belong are not in compliance with the issuing bank. These DRs of the same company are issued by several banks. But they are not allowed to trade in Security exchanges but only in OTC markets.

Advantages of buying an ADR

When a company wants to get listed as ADR, the depository banks take a thorough check of the company’s financial health. This reduces the burden of investigating the investing company and increases confidence while investing.
These DRs are available in Dollars, which helps investors get the right picture of the receipt’s cost, rather if they were traded in the country’s currency the investor has to go an extra mile to enable conversion.
The issuers of shares benefit from the wide international investor base and reach for the company, on the other hand, the investors benefit from a diversified global portfolio of investments.
Investing and issuing foreign shares will involve various regulatory and compliance protocols. But when it is done through ADR most of the administrative steps are cut.
These foreign investors will also enjoy the advantage of dividends and capital appreciation.

We started the article with types of financial instruments and then we discussed the meaning of hybrid instruments. In addition, we also discussed the types of hybrid instruments. Following this the depository receipts were depository receipts and, the types of depository receipts were considered. Besides the types of receipts, we understood the difference between the Indian Depository receipt and the American Depository receipt. Further, we looked into the ADR of Indian Companies. There are many advantages in buying an ADR, but there are disadvantages like the denial of voting rights to DR holders is present. It is wise to analyze before choosing to invest between domestic shares or depository receipts and also between depository receipts of various countries.

Finance World

Why Muthoot Finance is not affected by the small cap and mid cap fall?

Published

4 months ago

March 15, 2024

Adit Chauhan

This week, if you’ve been keeping an eye on the stock market, you might’ve noticed something unusual. While the small cap and mid cap markets took a serious dive, Muthoot Finance seemed to just avoid it, falling by a mere 2%. So, what’s their secret?

What is the business of Muthoot Finance?

First up, Muthoot Finance has a strong foothold in gold loans. Now, why does this matter? Well, when other investments seem risky, people tend to fall back on gold because it’s considered a safer bet. With gold prices staying high, Muthoot’s gold loan business is like a stable ship in a stormy sea.

Muthoot Finance target price by Kotak

Kotak Institutional Equities is pretty optimistic about Muthoot, recommending a “buy” with a target of Rs 1,500. They think Muthoot is in a prime spot to grab a bigger slice of the gold loan market. Plus, with some Non-Banking Financial Companies (NBFCs) hitting a rough patch, Muthoot has a clear ground to expand and grow further. Unlike NBFC, Muthoot has a strong ground presence with offices and branches, they have physical repo with their customers, unlike NBFC who operate from AC offices.

New Friends and New Frontiers

Muthoot isn’t just sitting pretty with its gold loans; it’s also making moves. It teamed up with Evfin to finance electric two-wheelers across India. And there’s more – Muthoot FinCorp has brought Veefin Solutions on board to kick off supply chain finance operations. This means they’re planning to lend a hand to small and medium businesses, helping them keep the wheels turning. So, its a great news that Muthoot is expanding into fields that are not dependent on gold loans alone.

Spreading Their Wings

Muthoot Microfin, a part of the Muthoot Group, is pushing into new territories too. They’ve just set foot in Telangana and have their sights set on Andhra Pradesh next. This move is about bringing more people into the financial fold, especially in places where banking services might be hard to come by. This gives an edge to Muthoot over banks and NBFC.

Are you wondering whether to invest in Muthoot Finance or Manappuram Gold? Take a look at this:

MUTHOOT FINANCE vs MANAPPURAM FINANCE A COMPARITIVE STUDY

So, What’s the Deal?

While the market’s mood swings have sent some companies into a pit, Muthoot Finance has managed to stay stable. Thanks to its focus on gold loans, strategic partnerships, and expansion plans, it’s not just surviving; it’s set to thrive. So, while the rest of the market might be catching its breath, Muthoot is marching on, steady as ever.

Keep following us for more such latest news on TradeAlone.

Finance World

Infibeam Avenues Ltd expands into the US Market with an Acquisition

Published

5 months ago

February 26, 2024

shaurya singh bhati

Hello, digital pioneers and fintech enthusiasts! Let’s dive into a groundbreaking announcement for Infibeam. Infibeam Avenues Ltd, an AI-powered financial technology, is embarking on an exciting journey by acquiring a 20% stake in XDuce. XDuce is a mastermind in enterprise Application and AI development based in the United States. This bold move involves an investment of USD 10 million. This also marks a significant milestone in Infibeam Avenues Ltd’s global expansion narrative.

XDuce: A Hub of Innovation

Nestled in the heart of New Jersey, XDuce boasts a team of over 150 software developers. They’re a team behind the curtain for marquee clients like Bank of America and Morgan Stanley, to name a few. XDuce’s expertise in business application implementations and transformation is nothing short of legendary in the financial and insurance sectors of North America.

A Fusion of Giants

So, what happens when Infibeam Avenues Ltd and XDuce comes together? Infibeam Avenues Ltd wants to merge it’s AI Solutions and CCAvenue Payments business into the network that XDuce has built. This collaboration is about expanding business footprints, revolutionizing how AI-driven technologies are employed in fraud detection, authentication, and risk identification in the financial sector of the US.

Redefining Financial Technology

Imagine a world where transaction fraud is no longer a looming threat, thanks to state-of-the-art AI technologies. That’s the vision Mr. Jay Dave, CEO of XDuce, and Mr. Rajesh Kumar SA, CEO of Phronetic.AI, share. By integrating PhroneticAI abilities with XDuce’s solutions, they will offer businesses and consumers in the US with security and efficiency.

The Road Ahead

According to Mr. Vishwas Patel, Joint Managing Director of Infibeam Avenues Ltd, international business currently contributes less than 10% to the company’s total revenue. But with strategic moves like this, they’re aiming for international business to soar to 30% of total revenue in the coming years.

Infibeam Avenues Ltd at a Glance

Infibeam Avenues Ltd is at the forefront of offering digital payment solutions and enterprise software platforms across the globe. With a transaction worth INR 4.5 trillion (US$ 54 billion) processed in FY23, and a client base of over 10 million. Spread across digital payments and enterprise software platforms, they’re leading digital revolution.

Wrapping Up

The strategic investment in XDuce is a bold step towards Infibeam Avenues Ltd’s vision of global expansion and innovation.

Stay tuned with Tradealone, as we continue to follow this exciting journey of Infibeam Avenues Ltd. Stock price for Infibeam closed 7% up today. We also see a continues profit growth for Infibeam Avenues over the past 4 years. Although, we cant recommend a buy or sell call for the stock, however we feel this stock deserves your attention.

Finance World

Satin Creditcare Expands its Reach by entering Telangana and Andhra Pradesh, stock has doubled so far this year

Published

5 months ago

February 21, 2024

Abhinav Tiwari

In a country where financial inclusion remains a major yet challenging goal, the expansion of services to underbanked regions marks a significant step forward. Satin Creditcare Network Limited (SCNL), a leading name in microfinance, announces its strategic entry into Telangana and Andhra Pradesh. This move not only amplifies SCNL’s presence to 26 states and union territories across India but also underlines its commitment to empowering the economically marginalized communities with vital financial services.

A Leap Towards Nationwide Financial Inclusion: SCNL’s mission to drive financial inclusion is more than just a business expansion; it’s a pledge to reach the unreached. The opening of two new branches in Telangana (Warangal and Huzurabad) and one in Kadiri, Andhra Pradesh, is a testament to SCNL’s dedication to making financial services accessible to all, especially in rural and semi-urban areas where banking facilities are scarce.

Why Telangana and Andhra Pradesh?

The choice of Telangana and Andhra Pradesh for SCNL’s latest expansion is strategic. Both states have shown promising economic growth yet house significant populations that lack access to basic financial services. By stepping into these states, SCNL aims to fill this gap, offering microfinance solutions that can serve as a catalyst for economic empowerment and sustainable development. Moreover, Telangana is a fast growing hub for Pharma industry as the state capital Hyderabad leads the way.

SCNL’s Blueprint for Empowerment

SCNL’s approach to empowerment through financial inclusion is holistic. Focused on rural India, with 76% of its operations dedicated to rural communities across 97,000 villages, SCNL is not just providing financial services but is also contributing to the rural economy’s growth. This expansion is a stride towards enabling access to credit for the underserved, thereby fostering an environment of economic resilience and growth.

A Message from the Leadership

Mr. HP Singh, Chairman cum Managing Director of SCNL, remarks, “Our expansion into Telangana and Andhra Pradesh is a significant milestone in our journey towards a financially inclusive India. It’s not merely about increasing our geographical footprint; it’s about touching lives, empowering the marginalized, and contributing to the nation’s economic fabric. We’re here to make a difference, one individual, one community at a time.”

Ashirvad Microfinance is a fast growing company as well. Check it out if you are interested.

Asirvad Microfinance achieves Remarkable Growth

Beyond Expansion – A Look at SCNL’s Innovations

SCNL’s innovations extend beyond traditional microfinance. The institution’s portfolio includes loans to MSMEs, affordable housing loans through its subsidiary Satin Housing Finance Limited (SHFL), and the commencement of MSME business through Satin Finserv Limited (SFL). These initiatives demonstrate SCNL’s commitment to diversifying financial solutions that cater to various needs of the underserved.

The Road Ahead for SCNL

As SCNL carves new paths in Telangana and Andhra Pradesh, the future looks promising. This expansion is not just about growth but about deepening the impact of financial inclusion across India. With continued innovation and a steadfast commitment to its mission, SCNL is poised to create significant strides in empowering communities and fostering economic development across the country. Moreover, the stock price for Satin Creditcare has almost doubled in the last one year.

Conclusion: SCNL’s expansion into Telangana and Andhra Pradesh marks a new chapter in its mission to facilitate financial inclusion across India. By reaching out to the economically marginalized sections of society, SCNL strengthens its role as a catalyst for economic empowerment and sustainable development. As we watch this journey unfold, the prospects for a financially inclusive India appear brighter than ever. Despite that we do not see any positive signs from the revenue and profit growth of the company over the last 5 years. Thus, we feel that investors must be cautious while investing here.

Remember that microfinance companies also face competitions from the major banks. However, as this move is towards uncharted regions of Telangana and Andhra, we do not think that the banks would pose any risk to Satin Creditcare.

Call-to-Action: We invite you to join the conversation: How do you think SCNL’s expansion will impact financial inclusion in Telangana and Andhra Pradesh? Share your thoughts and insights in the comments below. Let’s discuss how financial empowerment can transform lives and communities. Also, please follow Tradealone for more such latest updates.