Warburg pincus is their promoter with 52 percent stake. They will subscribe to the rights issue. If they dont the company will go under and RBI will never let another PE firm buy into any NBFC ever again.
So in a quarter CET1 will go up, provisioning will be made and balance sheet will degrow, till npa s are flushed out. Maybe even business model will change.
Probably the ceo will get fired as well once the rights issue is done.
If the covenants were breached in q1 and q2 most banks probably already knew about it . This will be a good test to see if VV actually had the chops to look ahead and provision conservatively ahead of time. He has already said that microfinance will lead to extra 150 crores of provision for next atleast 2-3 quarters
Short term : there will be lots of noise drama media chest beating etc etc but with the PE promoter this should be a low risk event
Disc : invested in idfc and not in fusion finance
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