Synopsis:
Dhruva Capital Services Ltd hit its 5 percent upper circuit after announcing a strategic merger with Vector Finance Private Limited, marking its entry into the microfinance space.
A leading NBFC stock surged to its upper circuit limit after the company announced a strategic move into the microfinance sector. Investor sentiment turned sharply positive as the merger highlighted the company’s expansion plans, backed by Vector Finance’s strong regional presence and growing AUM base.
Dhruva Capital Services Ltd, with a market capitalization of Rs. 68.68 crore, opened the session at Rs. 169.15 against a previous close of Rs. 161.10. The stock hit its upper circuit limit at Rs. 169.15, reflecting investor optimism following the merger announcement.
What’s the News?
The company announced a strategic merger with Vector Finance Private Limited, marking its foray into the microfinance business. Dhruva Capital, currently engaged in investment and financing, provides business loans, loans against property, commercial vehicle and equipment loans, invoice and lease rental discounting, and construction finance.
The Board of Directors approved the merger with Vector Finance, which will be subject to necessary approvals and sanctions from the National Company Law Tribunal, shareholders, and creditors of both entities.
Vector Finance reported Assets under Management (AUM) of Rs. 390.23 crore as of March 31, 2025, with operations spanning six states in eastern and northeastern India. In FY25, it disbursed Rs. 222.66 crore to 43,274 customers, generating Rs. 27.16 crore in operational revenue.
According to SIDBI data, the Indian microfinance industry reported a portfolio outstanding of Rs. 3,35,071 crore with 11.1 crore active loans as of March 31, 2025, with NBFC-MFIs contributing the highest share.
Comments from the Management
Mr Rahul Johri, Chairman, Vector Finance and a veteran banker with over 34 years of experience in leadership roles between the microfinance sector and banks such as Bandhan Bank, DBS Bank, Standard Chartered and Barclays said, the merger would offer perfect synergies and help create and develop a more diversified and resilient organisation.
“At Vector Finance it has been our constant endeavour to drive grassroot level penetration of finance in the country. This merger will offer the perfect synergies to help create and develop a more diversified and resilient organisation by leveraging upon Dhruva Capital’s understanding of financial sector and backed by our strong deep roots level connect in the MFI sector.
The merger will also help reduce the overall cost of borrowing besides providing access to additional capital, which in turn would help the company further improve both its topline and also endeavour to reduce the interest rate to customers.
This integration will enhance our ability to serve customers across segments, expand our product suite and unlock synergies in operations and capital efficiency,” Johri said.
Commenting on the merger, Mr Shreeram Bagla, Managing Director of Dhruva Capital Services Limited, said
“The proposed merger of Vector Finance with Dhruva Capital marks a significant milestone in our growth journey. The microfinance company has a strong presence across six key states in the eastern and northeastern parts of the country, which are largely underpenetrated.
By joining forces with the company, we wish to create a stronger and more resilient institution which combines our robust understanding of the financial sector with the deep and well entrenched reach of microfinance sector.
Our vision is to drive inclusive growth by penetrating into under penetrated markets and empowering underserved communities. We believe that this strategic merger will not only strengthen our balance sheet and help us expand our reach and presence but will also make finance accessible and affordable to the mass market.”
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Financial Snapshot
On a sequential basis, sales grew from Rs. 0.49 crore to Rs. 0.79 crore, registering a rise of 61.2 percent. Operating loss narrowed from Rs. 1.93 crore to Rs. 0.46 crore. Loss before tax reduced from Rs. 1.95 crore to Rs. 0.53 crore, while net loss contracted from Rs. 2.11 crore to Rs. 0.54 crore.
On a yearly comparison, sales increased from Rs. 0.46 crore to Rs. 0.79 crore, up 71.7 percent. However, operating profit declined from Rs. 0.41 crore to a loss of Rs. 0.46 crore. Profit before tax dropped from Rs. 0.41 crore to a loss of Rs. 0.53 crore, while net profit declined from Rs. 0.32 crore to a loss of Rs. 0.54 crore.
About the Company
Dhruva Capital Services Limited, incorporated in 1994 and based in Kolkata, is a non-banking financial company engaged in investment and financing services in India. The company provides a range of products including business and commercial vehicle/equipment loans, invoice discounting, loans against property, lease rental discounting, and construction finance. It also extends offerings such as EV/CV, gold, personal, and home loans.
Written by Manan Gangwar
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