Shares of a small-cap NBFC gained 5 percent to reach an intraday high of ₹ 183.80 apiece on the National Stock Exchange (NSE), after offloading its corporate loans to Phoenix Asset Reconstruction Company. At 02:12 PM, its shares were trading at ₹ 180.00 apiece.
Indostar Capital Finance is a non-banking finance company (NBFC) engaged in corporate lending and retail lending which includes commercial vehicle finance, SME finance & housing loan finance. With Brookfield & Everstone as co-promoters, IndoStar is a professionally managed and institutionally owned entity.
Ace investor Madhusudan Kela’s spouse Madhuri Kela holds 33,79,834 shares or a 2.48 percent stake in the company as per its latest shareholding pattern.
According to an exchange filing, the company has divested a portion of its legacy corporate loan book, including credit with overdue amounts between 31 and 89 days totalling ₹ 915 crore, to Phoenix Asset Reconstruction Company, in order to refocus on its retail asset books.
As per the agreement, Phoenix ARC will establish a trust responsible for overseeing the progress of associated real-estate projects. The trust will also consider allocating funds to complete these projects.
The strategic arrangement allows IndoStar to intensify its focus on expanding its core retail lending business. Following this transaction, the share of retail lending in the company’s assets under management (AUM) has risen from 85 per cent to approximately 95 per cent.
The company had focused on used vehicle financing over the past year, and the yields on Commercial Vehicle (CV) disbursals have exceeded 18 per cent, incrementally raising the yield of the overall portfolio. Moreover, a focus on used commercial vehicles has additionally resulted in reduced average ticket sizes of loans, which stood at Rs 7.6 lakh for the quarter ending June 2023 (Q1 FY24).
With a market capitalization of ₹ 2,394 crores, Indostar Capital is a small-cap company. Its shares were trading at a price-to-earnings ratio (P/E) of 11.78, which is lower than the industry P/E of 16.86, indicating that the stock might be undervalued as compared to its peers.
The company’s promoters hold a 75 percent stake in it, followed by retail investors with 22.03 percent, domestic institutional investors with 1.68 percent and foreign institutions with 1.29 percent stake.
Written by Simran Bafna
