Indostar Capital Finance (IndoStar) reported a mixed quarter. Although business momentum was subdued due to the tightening of underwriting policies, asset quality improved, aided by the ARC transaction, while credit costs remained stable QoQ. Key highlights: 1) Consolidated disbursements declined ~13% YoY to ~INR15.4b and retail AUM rose ~30% YoY to ~INR109b; 2) The company added ~240 employees in 4QFY25, bringing the total count to ~5,763; 3) the CV segment contributed ~68% to the retail disbursement mix; and 4) Credit costs were stable sequentially, translating into annualized credit costs of ~1.8%.
OutlookWe estimate a CAGR of 20%/94% in AUM/PAT over FY25-27, aided by improvements in NIM to 7.8%/8.5% in FY26E/FY27E. Reiterate BUY with a TP of INR360 (premised on 1.1x Mar’27E BVPS).
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