What is Five-Star Business Finance IPO Size?
Five-Star Business Finance IPO details; the company filed DRHP with market regulator SEBI on November 9, 2021. Five-Star Business Finance Limited is coming up with only an Offer for Sale (OFS) of INR 2752 Crore. The face value of each equity share will be INR 1 per equity share. Investors as well as promoters are selling part of their stakes in the company.
Utilization of Net Proceeds from Five-Star Business Finance IPO
Five-Star Business Finance Limited will not receive any amount from the offer for sale. The company will achieve the benefits of listing Equity Shares on the Stock Exchanges. This will enhance the visibility and brand image of the company, and provide liquidity to the Shareholders as well.
What is Five Star Business Finance IPO?
The company was incorporated as ‘‘Five-Star Business Credits Private Limited in Chennai, Tamil Nadu as a private limited company on May 7, 1984. The name again changed to “Five-Star Business Finance Limited” on April 12, 2016, and a certificate of change of name was issued by the RoC. Five-Star Business Finance is registered with the Reserve Bank of India (“RBI”) to carry on the business of a non-banking financial institution (NBFC) without accepting public deposits.
- Five-Star Business Finance Limited is a non-deposit-taking non-banking financial company (NBFC-ND-SI) company providing secured business loans to micro-entrepreneurs and self-employed individuals.
- Reaching out to the population that remains outside the realms of funding availability.
- Focused on south Indian states with target customers in urban and semi-urban locations, as well as in the rural markets of India.
- Four south Indian states of India – Tamil Nadu, Andhra Pradesh, Telangana, and Karnataka – are the major focus area of the company for its business.
- Typically target lower to middle-income group people from “everyday” cash and carry businesses with household net cash-flows of INR 25,000 to INR 40,000 per month.
- Fastest Asset under management as against peers with more than INR 3000 Crores. As of March 2022, total portfolio with the company is over INR 4639 Crores.
- The company has an extensive network of 268 branches in four states of South India as of September 30, 2021
Five-Star Business Finance Limited – Founders and Leadership team
Mr. Lakshmipathy Deenadayalan is one of the promoters, Chairman, and Managing Director of the Company. He holds a bachelor’s degree in engineering in computer science and engineering from the University of Madras. He has over 20 years of experience running this business.
Mr. Rangarajan Krishnan is the Chief Executive Officer of the Company. He holds a bachelor’s degree in commerce and a master’s in business administration from Sri Sathya Sai Institute of Higher Learning. Before this assignment, he was associated with The World Bank, HDFC Bank
Limited, Spark Capital Advisors (India) Private Limited, and Standard Chartered Bank India in various roles. He has been with the company since August 2015.
Five-Star Business Finance Limited – Financial snapshot
- The total income of the company has been growing over the years.
- The company is performing well in terms of AUM which has been going up over the period.
- Revenue from the operation is more than double in FY21 from FY19.
- Both EBITDA and PAT have been growing over the years.
- EPS has also been increasing over the period.
- However, Net debt/ equity is quite high for the company which is a risk factor.
- Consistently generated negative net cash flows from operating activities that may harm the business operation of the company.
- Low Net NPA to AUM
Five-Star Business Finance IPO – Valuation Parameters
| All amounts in INR Million (Year ended March 31) | 2019 | 2020 | 2021 |
|---|---|---|---|
| Revenue Operation | 4,089.08 | 7,867.15 | 10,497.42 |
| Total Income | 4,089.86 | 7,873.47 | 10,512.55 |
| Total Borrowings | 9,600.29 | 23,636.93 | 34,251.97 |
| EBITDA | 3,026.92 | 5,763.04 | 8,130.16 |
| EBITDA Margin | 74.02% | 73.25% | 77.45% |
| Profit after tax | 1,564.14 | 2,619.51 | 3,589.94 |
| Net Profit Margin | 38.24% | 33.27% | 34.15% |
| Earnings Per Share-Diluted | 6.73 | 10.07 | 13.61 |
| Net Cash from Operating Activities | (11,614.61) | (18,982.31) | (7,181.23) |
| Total Borrowings to Total Equity Ratio | 0.70 | 1.22 | 1.48 |
| Return on Equity Percentage | 15.11% | 15.35% | 16.85% |
| Return on Total Assets | 8.76% | 7.31% | 6.99% |
| AUM | 21,128.06 | 38,922.28 | 44,453.81 |
| Net NPA/AUM | 0.68% | 1.13% | 0.83% |
| Live Accounts | 72,890 | 143,079 | 176,467 |
| Amount Disbursed (₹ in million) | 14,814.62 | 24,086.69 | 12,450.54 |
| Gross NPA to AUM (%) | 0.88 | 1.37 | 1.02 |
| Net NPA to AUM (%) | 0.68 | 1.13 | 0.83 |
Five-Star Business Finance IPO: Do you invest?
- Strong presence in south Indian states with over 268 branches and 3897 employees.
- Five-Star Business Finance credit rating is A+ and manages over INR 4639 crores portfolio.
- Total income is better than its listed close competitors such as Aavas Financiers and Aptus Value. Another peer Utkarsh small finance bank is also listing in the exchanges soon.
- Return on Net worth (RoNW), EPS, and NAV are better in comparison to their above peers.
- However, Five-Star Business Finance Limited has had negative net cash flow from operations over the years.
- The borrowing-to-equity ratio has increased over the years.
- Its close peer Aptus Value has fallen more than 20% from its high after listing Aug 2021.
- The valuation seems reasonable to me.
- I would invest in the IPO for long term.
Five-Star Business Finance IPO Details
| Five-Star Business Finance IPO Details | Details |
|---|---|
| Five-Star Business Finance IPO Date | Nov 9, 2022 to Nov 11, 2022 |
| Five-Star Business Finance IPO Price band | ₹450 to ₹474 per share |
| Five-Star Business Finance IPO Allotment date | Nov 16, 2022 |
| Refunds Initiation date | Nov 17, 2022 |
| Credit of Shares to Demat Account | Nov 18, 2022 |
| Listing Date | Nov 21, 2022 |
| Five-Star Business Finance IPO Issue Size | INR 2752 Crore |
| Offer for Sale | INR 2752 Crore |
| Equity Shares outstanding prior to the Offer | 290,135,120 Equity Shares |
| Minimum bid for Retail (equity Shares) | 31 Shares |
| Minimum bid Size for Retails | INR 14, 694 |
| Maximum bid Size for Retails | INR 191,022 |
| Face Value | INR 1 per share |
| Listing on | BSE & NSE |
Suggested Readings
We endeavor to help you to understand different aspects of a company before you invest in the company’s IPO. Here are some suggested readings on company insights Prasol Chemicals Limited, Concord Biotech Limited, Sah Polymers Company, Utkarsh small finance bank.
Five-Star Business Finance limited Contact Details and lead managers
| Contact Details | Lead Managers |
| Five-Star Business Finance Limited New No. 27, Old No. 4, Taylor’s Road, Kilpauk, Chennai 600 010, Tamil Nadu, India; Tel: +91 44 4610 6260; Website: www.fivestargroup.in; | 1. ICICI Securities 2. Edelweiss Financial Services Limited 3. Kotak Mahindra Capital Company Limited 4. Nomura Financial Advisory and Securities (India) Private Limited |
Five-Star Business Finance IPO Allotment Status
Five-Star Business Finance IPO allotment will be available on KFin Technologies website. To know your allotment status, get ready with your PAN number and click on this link.
Five-star business finance IPO GMP
| Date | Grey Market Premium | IPO Price |
| 9-11-2022 | INR 10 | INR 474 |
| 8-11-2022 | INR 10 | |
| 7-11-2022 | INR 8 | |