The shares of this NBFC stock gained traction up to 4 percent this week after DAM Capital gave an upside target of 37 percent.
On Friday, Five Star Business Finance Limited shares gained traction to reach an intraday high of 733.55 per share on the National Stock Exchange. The company has a market capitalization of Rs 21,354 crore.
Five Star Business Finance’s revenues increased by 44 percent year on year from Rs 361 crore in Q2FY23 to Rs 519 crore in Q2FY24, while net profit has increased by 38 percent from Rs 144 crore to Rs 199 crore.
Five-Star Business Finance Ltd shares have gained 12 percent in the last six months and 22 percent in a year.
DAM Capital initiates a Buy rating on Five-Star Business Finance Ltd. The brokerage has given the target price of Rs 1,000, representing an upside of 37 percent from Friday’s trading price of Rs 730.30.
The brokerage believes that the company has a strong capital adequacy of 59.4% and sees no need for dilution for the next five years.
DAM capital highlighted that the company has delivered a RoA (return on assets) of 8.5% in H1FY24, In contrast, the brokerage expects that due to strong loan growth, the company’s ROA could come down from its current level.
Five Star Business Finance Limited is an NBFC company that provides secured loans to micro-entrepreneurs and self-employed individuals for business purposes, as well as for asset creation such as home renovation or improvement, or meeting expenses for significant economic events such as marriage, healthcare, and education.
As of the September quarter, the company’s AUM increased to Rs 83 billion with an AUM growth of 20 percent from March 2023. The company has around 373 branches across India.
Written by Omkar Chitnis
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