Five-Star Business fell over 5% after huge block deal

Five Star Business Finance Ltd fell more than 5% in early morning trading on September 1 after about 2.48 crore shares, or 8.5% of the company’s capital, changed hands in two combined transactions.
Bloomberg said details of buyers and sellers were not known. On August 31, CNBC-TV18 reported that private investors Matrix Partners, TPG Asia and Norwest Ventures are likely to sell up to 8.8% of their shares in Five Star Business Finance through block transactions. .
According to the report, the floor price for block trading could be Rs 724/share, down 6.25% from the current market price.
The total size of Five Star Corporate Finance including core scale will reach Rs 1,860 crore. In the first quarter of this financial year, the non-bank lender posted a 31.8% increase in net profit to Rs 183.7 crore. The company’s net profit reached Rs 139.4 crore in the same period last year FY23. As one of the fastest growing companies in its segment, Five Star Business Finance offers secured business loans to micro entrepreneurs and self-employed people (secured by independent residential property). ) has a strong presence in South India.
“Five Star achieved its fourth consecutive quarter of high earnings with Q1 FY2024 NPAT growth of 32% YoY/9% QoQ and assets under management of 43% YoY/ 10% QoQ… Growth in assets under management was driven by branch expansion and growth in average ticket size due to inflation. Nuvama Institutional Equity said in a note.
Five Star has added 75 more branches by year (YoY) and 13 branches by quarter (QoQ). Portfolio yields and cost of capital remained stable, resulting in flat quarterly spreads, but net margin fell sharply by 73 basis points due to high leverage.
One basis point is equal to one hundredth of a percentage point.
As of 9:30 a.m., shares were trading at Rs 734 on BSE, down 5.1% from the previous closing price, while the benchmark Sensex index gained 0.2% to 64,949 points. .