Five-Star Business Finance rallies 3% after Smallcap World Fund raises stake

Public holds the majority of the stake in Five-Star Business Finance stock with 52.16 percent.

Shares of Five-Star Business Finance jumped nearly 3 percent in early trade on September 18 after SmallCap World Fund raised its stake in the company.

At 10:40am, the Five-Star Business Finance stock was trading 2.68 percent higher at Rs 705.12 on the BSE.

Foreign company SCHF PV Mauritius sold 30.19 lakh shares or 1.03 percent stake in the non-banking finance company at an average price of Rs 700.15 per share, amounting to Rs 211.35 crore. It held 1.2 percent shares in the company as of June 2023. However, foreign portfolio investor Smallcap World Fund Inc was the buyer for entire Five-Star shares in this deal, in addition to its current holding of 1.64 percent or 47.78 lakh shares as of June 2023.

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Brokerage views

ICICI Securities is bullish on Five Star Business Finance and has recommended a ‘buy’ rating on the stock with a target price of Rs 860 in its September 6 research report. “AUM growth reviving to 37 percent in FY23 vs 14 percent CAGR between FY20-22 (covid impact) is a testimony to its agility and business resiliency,” it said.

“In a high human-touch model, adherence to standard-operating-process (SOPs) becomes a prerequisite, and negligible frauds / mishandling of cash in FY23 (and even in previous years) reflects its tight control on processes and staff quality. Notably, gross stage 3 increased marginally to 1.36 percent in FY23 vs 1.06 percent in FY22 despite the implementation of daily DPD recognition from October 22,” it said.

Brokerage firm Nomura has initiated coverage on Five-Star Business Finance with a ‘buy’’ rating and set a price target of Rs 750 in a recently released report.

Shareholding pattern

Public holds the majority of the stake in Five-Star Business Finance stock with 52.16 percent. Promoters and FIIs hold 34.39 percent and 8.74 percent stake respectively. DIIs hold the remaining 4.71 percent stake in the Five-Star Business Finance Non-Banking Financial Institution.

Stock performance

Five-Star Business Finance stock has given a return 38.17 percent over the past six months. The benchmark Nifty Bank index has given a return of 18.48 percent over the same duration.

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