GMP, IPO Details; Should you Subscribe?

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Five Star Business Finance IPO Opens Tomorrow: Five Star Business Finance will be opening for subscription on November 9, and closing on November 11. The non-banking finance company will raise Rs 1,960 crore via its public issue comprising only an offer for the sale of 4.13 crore equity shares by selling shareholders.

Five Star Business Finance has raised 588 crore from 16 anchor investors ahead of its IPO. The Chennai-based NBFC said it had allocated 12.4 million shares at 474 apiece to anchor investors. They included Capital Research, Fidelity Investments, ADIA, Norges Bank, Carmignac Gestion, White Oak, Malabar Investments, Bay Capital and Segantii, Enam, SBI Life, HDFC MF, Baroda BNP, Edelweiss MF, Mirae, and Gee Cee Ventures among others.

Five Star Business Finance IPO Financials

The NBFC posted a 19.49 per cent growth in total income at Rs 1256.16 crore in FY22 from Rs 1051.25 crore in FY21, while its net profit stood at Rs 453.54 crore in FY22 from Rs 358.99 crore in FY21.

Total income increased by 12.74 per cent to 339.05 crore for the three months ended June 30, 2022, from Rs 300.75 crore for the three months ended June 30, 2021, primarily due to an increase in revenue from operations. Profit after tax increased by 37.28 per cent to Rs 139.43 crore for the three months ended June 30, 2022, from Rs 101.57 crore for the three months ended June 30, 2021.

Five Star Business Finance IPO GMP Today

Meanwhile, ahead of subscription opening date, shares of Five Star Business Finance have made their debut in grey market as well. According to market observers, Five Star Business Finance IPO grey market premium (GMP) today is Rs 9. It should be noted that Five Star Business Finance shares were not available for trade in grey market till last Friday. This means the stock has made its debut in grey market today. They said that the public issue is available at par with its price band of Rs 450 to Rs 474 per equity share. However, there can be some spike in the grey market premium of the IPO once it opens for subscription on Wednesday this week. They went on to add that much will depend on the kind of response it gets from the investors and how the secondary market mood remain during three days of subscription of the IPO.

“Five Star Business Finance is a notable NBFC player in South India which enjoys a unicorn status with the presence of some marquee investors. The prices for the unlisted shares ranged widely, from about Rs 360 to Rs 725. Despite all industry odds, the company has consistently produced excellent financial results, which has kept investors interested in its unlisted shares. However, due to a large downturn in both the listed and unlisted markets, the shares have declined almost 35 percent in the past year,” said Manan Doshi, co-founder, unlistedarena.com.

“The issue is valued at a P/E of about 25 times its annualised FY23 earnings and a P/BV of 3.58x (based on June 2022 figures), which appear to be a little lower than its listed competitors. The primary market is gradually picking up steam, and the issues that are fairly priced, where investors have something to gain, are receiving a decent response,” Doshi added.

The public issue is priced at a price band of ₹450 to ₹474 per equity share. It will open for subscription on 9th November and it will remain open for bidding till 11 November 2022. The PO is proposed for listing on both BSE and NSE and it is likely to list on 21st November 2022.

Incorporated in 1984, the company provides secured business loans to micro-entrepreneurs and self-employed individuals, operating with 311 branches in 8 states and one union territory as of June 2022.

Five star Business Finance competes with Shriram City Union Finance Limited, Vistaar Financial Services Private Limited, Veritas Financial and Management Services Private Limited, Aye Finance, Lendingkart Technologies Private Limited, Digikredit Finance Pvt Ltd and AU Small Finance Bank, Aavas Financiers Limited, Home First Finance Company India and Aptus Value Housing Finance India.

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