Five Star Business Finance IPO

Five Star Business Finance Limited is an NBFC-ND-SI that provides secured business loans to micro-entrepreneurs and self-employed persons who are often overlooked by traditional lenders. Five Star Business Finance IPO will hit the stock market in 09 November 2022.

About Five Star Business Finance

Five star is based in Chennai, Tamil Nadu, with a large presence in south India, and all of their loans are secured by the property of their borrowers, which is primarily SORP.

According to the CRISIL Report, they have the quickest AUM growth among their comparative peers within a sample of major peers, with a compound annual growth rate of 65.0 percent.

They had the highest average return on AUM of 7.9% among a sample of big peers for the timeframe covering Financial Years 2021, 2020, and 2019.

They are between the top three in terms of Gross Non-Performing Assets as a proportion of AUM. While they have the best asset quality across lenders engaged in granting MSME business loans as recognized by CRISIL.

Loan Book

In the last six months and three years, over 95 percent of their loan portfolio consists of loans ranging in principal amount from 0.1 million to 1.0 million, with an average ticket size of 0.27, 0.26,0.31 0.34 million.

They offered loans to more than 185,000 clients in total for the six months ending September 30, 2021 and the Financial Years 2021, 2020, and 2019. As of September 30, 2021, and March 31, 2021, we had a current loan base of 192,270 and 176,467, correspondingly.

Their AUM increased by 65 percent during the financial year 2017 and the six months ended September 30, 2021, from 4,935.88 million on March 31, 2017 to 46,392.91 million on September 30, 2021 (44,453.81 million on March 31, 2021).

Business Model

They’ve created a business strategy focused on establishing an adequate risk framework and determining the best instalment to income ratio.

This is to ensure that their customers have the financial resources to repay the loan after fulfilling their regular obligations and other event-related capital needs.

They mainly provide small loans for business purposes, accounting for 29,099.02 million (62.72 percent of AUM) as of September 30, 2021.

They also offer loans for asset creation, including home renovation or improvement, or for meeting expenses for substantial economic events, including marriage, healthcare, and education, accounting for 17,293.89 million as of the same dates.

Five Star Business Finance IPO

Five Star Business Finance Limited, headquartered in Chennai has submitted Draft Red Herring Prospectus(DRHP) to Securities and Exchange Board of India(SEBI) for initial public offering (IPO) of INR 2,751.94 crores on 10 November 2021.

The offer doesn’t includes any fresh issue and there is offer for sale (OFS) of 2,751.94 crores by the promoters mentioned in the DRHP. They are not looking for any pre-IPO placement in this issue.

They are now waiting for approval from Securities and Exchange Board of India(SEBI) to float the initial public offering (IPO) in the market.

Financials Trends

Particulars	For the year/period ended ( in Cr.)
	30-Sep-21	31-Mar-21	31-Mar-20	31-Mar-19
Total Assets	6,374.57	5,793.61	4,353.15	2,361.17
Total Revenue	611.24	1,051.25	787.35	408.99
Profit After Tax	217.55	358.99	261.95	156.41

Basic and Diluted Earnings Per Share

Financial Period	Basic EPS (in INR)	Diluted EPS (in INR)	Weight
Financial Year 2021	14.01	13.61	3
Financial Year 2020	10.32	10.07	2
Financial Year 2019	6.88	6.73	1
Weighted Average	11.59	11.28
30 Sep. 2021	7.96	7.85

Objects of the Issue

• Prepayment / repayment of all or a portion of the outstanding borrowings of the company to be availed on consolidated basis.
• To meet common corporate objectives.

Basis of the offer

• With over 30,000 million in AUM, they have the quickest AUM growth among their rivals.
• In the lack of typical documentary proofs of income, one of the few institutions to establish an underwriting model that examines the cash-flows of small business owners and self-employed people.
• Strong on-the-ground collection infrastructure enables us to maintain high asset quality.
• Ability to use a calibrated expansion plan to successfully grow into new underserved locations.
• Providing access to diversified and cost-effective long-term finance through 100% in-house sourcing, complete credit evaluation, and a sophisticated risk management and collections structure.

Five Star Business Finance IPO Peer Comparison

S. No.	Face Value	Company Name	PE
1	10	Aavas Financiers Limited	76.49
2	2	Aptus Value Housing Finance Limited	62.59
3	10	AU Small Finance Bank Limited	32.32

Note:

1. From the NSE portal, the closing price of these equity shares on November 04, 2021.
2. All financial data for listed industry peers is consolidated (unless otherwise stated) and derived from the respective firm’s annual results/reports for the fiscal year ended March 31, 2021.

Five Star Business Finance IPO Details

IPO Opening Date	09 November 2022
IPO Closing Date	11 November 2022
Issue Type	Book Building
Face Value	1 per share
IPO Price	450 to 474 per equity share
Market Lot	31 Share
Min Amount	INR 14,694
Listing At	BSE, NSE
Issue Size	1,960.05 Crores
Fresh Issue	–
Offer for Sale	1,960.05 Crores

Five Star Business Finance IPO Date

Five Star Business Finance IPO opening date is 09 November 2022, and the closing date is 11 November 2022. The Five Star Business Finance issue may list is 21 November 2022.

IPO Opening Date	09 November 2022
IPO Closing Date	11 November 2022
Basis of Allotment Date	17 November 2022
Initiation of Refunds	18 November 2022
Credit of Shares to Demat Account	20 November 2022
IPO Listing Date	21 November 2022

Basis of Allotment

Type	% of Offer	Basis of Allotment
Qualified Institutional Buyer	50	Roughly equivalent
Non Institutional Investor	15	Roughly equivalent
Retail	35	Minimum level of 1 lot, based on availability, for every shareholder.

Five Star Business Finance IPO Allotment Status

Allotment of equity stocks subject to the Fresh Issue and transfer of the Promoter Selling Shareholders’ OFS Stocks to the winning Bidders subject to the Offer for Sale. Nevertheless, the status of the allotment has yet to be revealed.

Here, you can find the Allotment Status of Five Star Business Finance IPO.

Five Star Business Finance IPO GMP

Five Star Business Finance IPO Grey Market Premium is 0. You can check out GMP of Other IPOs on below Links:

Date	GMP (in Rs)	Subject to Sauda	Kostak (in Rs)
November 2022
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Check Out the GMP of all Other IPOs

IPO Grey Market Premium

Five Star Business Finance IPO Review

Five Star Business Finance IPO review : If you are looking for answer to your question that Five Star Business Finance IPO is good or bad then you can apply with a long term view.

Five Star Business Finance IPO Risk

• The Coronavirus epidemic has had certain negative consequences for their company.
• They require a significant amount of capital to operate their business, and any disruption in their financing sources might have a negative impact on their operations.
• Non-payment or default by our debtors may have a negative impact on their business.
• They have a large number of first-time borrowers, which increases their chances of non-payment or default.
• Failure to meet their obligations, such as financial and other covenants under their debt financing agreements, could have a negative impact on their business.
• Any decline in the efficiency of any pool of receivables securitized to banks and other institutions could have a negative impact on their company.

Other Threats

• Any reduction in their credit ratings could raise their borrowing costs and have a negative impact on their operations.
• They may experience asset-liability mismatches, which could impact their liquidity and, as a result, their operations.
• If they are unable to recover the full value of collateral or amounts owed under defaulted loans in a timely way, it would have a negative impact on their business.
• If they are unable to maintain their capital adequacy ratio, it will have a negative impact on their operations.
• They’ve seen a lot of growth in recent years, and it’s possible that they won’t be able to keep it up in the future.
• They have had negative net cash flows in the previously, and they may continue to do so in the future.

Growth

Five Star Business Finance’s growth is mostly driven by volume, with the ATS being steady, and they expect this trend to continue.

The interest rates on their loans are determined by the underlying tenor (which runs from two to seven years), with around 95 percent of loans sanctioned falling between the 24 percent to 26 percent interest rate range and the five to seven-year tenure range.

All of their client leads are generated in-house, without the use of direct selling agents; also, all of their loans are fully secured, with over 95 percent of the collateral being SORP at the time the loan application is granted.

Footprints

As of September 30, 2021, they had a large network of 268 branches spread throughout 126 districts, eight states, and one union territory, with Tamil Nadu, Andhra Pradesh, Telangana, and Karnataka being their core states.

As of September 30, 2021, such significant states accounted for over 85% of their branch network in terms of number. They had 92 percent of their branches in cities and towns with populations of up to one million people.

They began operations in Chennai, Tamil Nadu, and have expanded their operations by increasing the number of branches through a calibrated strategy of contiguous expansion throughout geographies where their offering is in high demand.

Five Star Business Finance IPO Brokerage views

• Yes Securities : Not Updated
• Choice Brokering: Not Updated
• Axis Securities: Not Updated
• IIFL Securities: Not Updated
• Trade swift: Not Updated
• Anand Rathi : Not Updated
• ICICI Securities: Not Updated

Five Star Business Finance IPO Subscription Status

Date	Day	QIB	NII	Retail	Employees	Total Subscription
09 November 2022	1
10 November 2022	2
11 November 2022	3

Promoters

• Lakshmipathy Deenadayalan
• Hema Lakshmipathy
• Shritha Lakshmipathy
• Matrix Partners India Investment Holdings II, LLC
• SCI Investments V

Promoters’s Holding

Pre Issue Share Holding	43.17%
Post Issue Share Holding

Five Star Business Finance Prospectus