Indostar Capital Finance hits 52-week high; stock surges 37% in 7 days

On August 18, Indostar Capital Finance allotted debentures to State Bank of India, worth Rs 200 crore, on preferential placement basis

Indostar Capital Finance shares vaulted as much as 19.3 per cent to hit fresh 52-week high of Rs 329.8 apiece on the BSE in an otherwise flat market on Wednesday. With today's intra-day gain, the stock has surged 36.6 per cent on the BSE in the past seven trading sessions, as against 2.4 per cent gain in the S&P BSE Sensex, BSE data show.

On August 18, the company allotted 2,000, Secured, Redeemable, Non-Convertible, Rated, Listed, Taxable Bonds in the nature of Debentures of Face Value of Rs 10 lakh each, for cash, at par, aggregating to Rs 200 crore to State Bank of India on private placement basis.

The tenor of these debentures is 18 months and were issued at a coupon rate of 8.95 per cent per annum. READ HERE

One of India's leading retail non-bank finance company (NBFC) registered a consolidated net profit of Rs 47.21 crore during June quarter of FY21, as against a net loss of Rs 421.39 crore in the preceding quarter (Q4FY20). In the corresponding quarter of the previous fiscal, Indostar had posted a net profit of Rs 47.09 crore. It's consolidated revenue from operations came in at Rs 307.63 crore in the quarter under review, compared to revenue of Rs 303.95 crore of Q4FY20 and Rs 381.68 crore of Q1FY20.

"The extent to which the Covid-19 pandemic will impact the company’s results will depend on future devalopments, which are highly uncertain. The company's capital and liquidity position is strong and would continue to be the focus area during this period. In accordance with the RBI guidelines relating to Covid-19 Regulatory Package, the company has granted moratorium to its customers as per its Board approved policy," it said in a statement. 

That apart, the NBFC said it closed a Rs 1,225 crore equity capital-injection by Brookfield Business Partners L.P, together with its institutional partners during the quarter. According to Indostar, all three tranches of the Brookfield investment - the equity infusion, the open offer and the secondary offering of shares have been completed. Brookfield is now a Co-promoter along with Everstone and is represented on the board by two directors.

"The quarter was characterized by a stable loan book, healthy PPoP, and modest credit costs. During the quarter, Brookfield infused Rs 1,225 crore capital via preferential allotment and CCPS. Moreover, by the start of July, it had also completed the open offer. As a result, Brookfield now owns 54 per cent of the company, which shall further increase to 57 per cent post the CCPS conversion," said analysts at Motilal Oswal in a result-review report.

The key concern, according to the brokerage, pertains to asset quality trends post the lifting of the moratorium, especially since its moratorium rate is higher than that of most peers. "While the company is very well-capitalised with a strong new parent, we expect modest growth over the next 12-18 months. Hence, RoE is likely to remain only in the mid-to-high single digits," they said. The brokerage maintains 'Neutral' call on the stock with target price of Rs 290 (0.9x FY22E BVPS).

At 2:04 pm, the stock was at Rs 325 per share, up 17.6 per cent, on the BSE. In comparison, the benchmark Sensex was trading 0.34 per cent higher.