A company with a ‘fundamentally strong’ nature portrays certain specific characteristics such as strong and consistent financials, lower leverage ratios, and many more. Listed below is one such fundamentally strong NBFC stock wherein Foreign Institutional Investors (FIIs) increased their stake by more than 40 percent:
Five-Star Business Finance Limited
With a market capitalization of Rs 22,963.96 crores, the stocks of Five-Star Business Finance Limited closed at Rs 785.85 on Friday, slipping around 2.30 percent as compared to the previous close of Rs 804 apiece.
Having a quick walkthrough of the company financials, the basic business indicators such as operating revenues and after-tax profits showed a consistent increase in numbers.
The former jumped recently from Rs 1,254.06 crores during FY21-22 to Rs 1,520.85 crores during FY22-23, and, the latter, during the same period, moved up from Rs 453.54 crores to Rs 603.5 crores.
Moreover, the company’s profitability ratios such as the return on equity (RoE) and return on capital employed (RoCE), in the past couple of financial years, stayed uniform at levels of 15 percent. It successfully increased the net profit margins consistently from 34.20 percent during FY20-21 to 39.68 percent during FY22-23.
The company’s debt-to-equity ratio, one of the most tracked leverage metrics, though increased, has stayed within the desired limits. It increased from 0.70 times during FY21-22 to 0.99 times during FY22-23.
As per the latest shareholding data available for the quarter ended September 2023, the company’s Promoters hold a 31.3 percent stake.
Moreover, Foreign Institutional Investors (FIIs) have drastically increased their stake by more than 40 percent, viz, from 8.74 percent during the June 2023 quarter to 50.22 percent during the latest quarter ended September 2023.
Five-Star Business Finance Limited is involved in the business of providing secured loans to various self-employed individuals and micro-entrepreneurs for business as well as asset creation such as healthcare, education, renovations, etc.
Written by Amit Madnani
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