Stock of this non-banking finance company has zoomed 105% in 3 months

Shares of Paisalo Digital rallied 15% to hit a record high of Rs 164 in intra-day trade on Monday, thus surging 63% in past one month on promoter buying and strong December quarter earnings.

Shares of Paisalo Digital rallied 15 per cent to hit a record high of Rs 164 on the BSE in Monday’s intra-day trade on the back of heavy volumes after the company fixed March 20, 2024 as the 'Record Date' for ascertaining the eligibility of shareholders entitled for issuance of bonus equity shares of the company.

In past one month, the market price of non-banking finance company (NBFC) has surged 63 per cent on promoter buying and strong December quarter (Q3FY24) earnings. On January 31, the board had announced issue of bonus shares in the ratio of 1:1 i.e. one new bonus share for every one existing share held by the shareholders. In past three months, the stock zoomed 105 per cent.

At 11:03 am; Paisalo Digital was trading 14 per cent higher at Rs 162.40, as compared to 0.24 per cent rise in the S&P BSE Sensex. The average trading volumes at the counter more than doubled. A combined 5.94 million shares representing 1.89 per cent of total equity of the company changed hands on the NSE and BSE.

Since January, Equilibrated Venture Cflow Private Limited, one of the promoters of the company, has acquired 4.78 million or 1.06 per cent stake in the company via open market. According to disclosure made by Paisalo Digital, Equilibrated Venture Cflow Private Limited increased its stake in the company to 13.82 per cent on February 9. It held 12.76 per cent stake in Paisalo Digital at the end of December 2023 quarter, the shareholding pattern data shows.

Among other shareholders, SBI Life Insurance Company held 11.35 per cent stake in Paisalo Digital. Life Insurance Corporation (LIC) and State Bank of India (SBI) held 1.35 per cent and 1.34 per cent stake, respectively, data shows. Foreign portfolio investors held 15.66 per cent holding in the company.

Paisalo Digital is primarily focusing on financing self-employed borrowers, a segment which is still untapped / unserved, driven by rising affluence, aspirations and favorable demographics. The company has entered into an arrangement with a prominent PSU bank, wherein it would originate loans under its income generation loans extended to both individuals and under its group lending schemes, of which major share would be funded by the PSU bank and the balance would be funded by the company.

In Q3FY24, Paisalo Digital had reported 40.43 per cent year-on-year (YoY) growth in asset under management (AUM) at Rs 4,228 crore. In Q3, the company added 230 new touch points, taking total touch points at to 1,944 across 18 states. The company posted 94.72 per cent YoY rise in profit before tax at Rs 191.6 crore, and 95.1 per cent YoY jump in profit after tax at Rs 142.4 crore.

Paisalo said it has written off bad debts totaling to Rs 24.5 crore and has recovered old written off bad debts worth Rs 38.1 crore in Q3FY24. This has impact of Rs 13.5 million positive to bottom line.

Assets quality of the company also improve with gross non performing asset (GNPA) and net NPA stood at 0.23 per cent and 0.02 per cent as at Q3FY24 compared to 0.75 per cent and 0.26 per cent as at Q3FY23. The company expects its GNPA and NNPA to stay within the Long-Term outlook of below 2 per cent.

Analysts believes Paisalo Digital’s will continue benefit from its operational track record in the business, controlled NPA level, adequate capital adequacy, availability of fund for further growth and higher acceptability of the company in the market.