Shares of Five-Star Business Finance almost hit the 20 per cent upper circuit on the BSE in intra-day deals on Monday after the company posted strong Q1 earnings.
At 10:00 AM, the stock was trading 7.3 per cent higher at Rs 777 on volume of around 38,000 shares on the BSE as against the two-week average traded volume of around 15,000 shares. Meanwhile, the S&P BSE Sensex quoted at 66,190 – up 0.1 per cent.
Following today’s sharp rally, the stock has soared nearly 83 per cent when compared with its issue price of Rs 474 per share in November 2022.
Meanwhile for the quarter ended June 2023, Five-Star Business net profit rose to Rs 184 crore, up 32 per cent YoY and 9 per cent QoQ. Assets under Management (AUM) grew by 43 per cent YoY to Rs 7,583 crore. The company’s disbursements in the June quarter nearly doubled to Rs 1,132 crore.
Five-Star continued to build on the strong business and disbursal momentum built in
Q4FY2023. During the quarter, we disbursed Rs 1,132 crore of loans as against Rs 1,110 crore in the previous quarter added 13 branches during Q1FY2024 resulting in a strong branch network of 386 branches, Lakshmipathy Deenadayalan, Chairman & Managing Director said.
While there was a marginal increase in NPA numbers as compared to the previous quarter (1.41 per cent in Q1FY24 vs 1.36 per cent in Q4FY23), which is a typical Q1 phenomenon. We are very confident that the strong growth in disbursements and collection efficiencies pave the way for a strong trajectory across growth, quality and profitability, Lakshmipathy added
Analysts at Nuvama have reiterated ‘BUY’ rating on the stock, given strong growth with improving asset quality.
Management has guided for higher AUM growth of 35 per cent (from 30 per cent) and better asset quality. We are revising up the Target Price to Rs 840 (from Rs 720) based on a target valuation of 4.2x BV FY25E (earlier 3.6x), Nuvama said in a note.