Overview of the Company
Formed in the year 1982, Five Star is non-Banking Finance Company (NBFC) with the Reserve Bank of India (RBI), specialized in providing financial services to address the needs of unbanked, and unserved segment, funding the people who were perceived to be non-fundable. The customers include all the way from small shop owners, flower vendors, maids, masons to small and medium enterprises that form the backbone of India’s economy.
The focus area of the company is to strike its operations to more and more under-served self-employed and Small Business customers and help them access credit on reasonable terms by opening more number of branches in the semi-urban/rural areas. The company has one wholly-owned subsidiary called Five-Star Housing Finance Private Limited which was incorporated on 28th September 2015, registered with the National Housing Bank (NHB) as a non-deposit taking Housing Finance Company (HFC).
Five Star provides Small business loans to meet borrower requirements for commencing new businesses, expansion of his/ her existing businesses and to settle any unorganized dues he/ she has taken to further their businesses. The loans are given based on the company’s evaluation of the borrower household cashflows coupled against the security of the borrower’s house collateral.
The typical loan ticket ranges between Rs 1 lakh to Rs 10 lakhs for a tenure between 24 and 84 months. The repayments are to be made on a monthly equated basis.
What makes Five-Star business robust
A) Mortgage property to give loans:
The company follows a business model, where lending to potential borrowers is secured by the twin factors of strong business income and emotionally attached property. The income of the borrower secures the loan during good times while the property mortgaged secures the loan during difficult times. The right combination of income and property has helped and continues to help the company maintain its asset quality even during difficult times like demonetization, implementation of GST, recent liquidity challenges, etc.
B) Robust Capital Structure:
Five Star has manageable leverage, leading to a healthy D/E ratio. Despite regulatory guidelines allowing for a much higher cap, the company never crossed 3.5 – 4x of leverage, which gives a lot of comfort to lenders.
C) Asset-Liability Mismatch:
The company over the years has maintained a steady Asset-liability mismatch. Many times to increase the Net Interest Margin of the company, the management tries to get loans for a shorter duration- which means at a lower cost and lend for long-term. This creates a problem during difficult times, and the perfect example is DHFL, where due to the Asset-liability mismatch, the NBFC with more than 1 Lakh Crores of loan book got burst.
As can be seen from the table above, the company has always been on the positive side of ALM over the last 4 years. This did come at a cost in the form of the higher cost of funds; however, the company was fully cognizant that such short-term pains were necessary to create a longstanding institution.
Presence
State | No. of Branches(2019) | No. of Branches(2020) | No. of Branches(2021) |
Madhya-Pradesh | 7 | 26 | 27 |
Maharashtra | 2 | 4 | 4 |
Telangana | 31 | 36 | 38 |
Andhra Pradesh | 46 | 64 | 68 |
Karnataka | 11 | 30 | 32 |
Tamilnadu | 76 | 88 | 89 |
Chhattisgarh | 0 | 3 | 3 |
UP | 0 | 1 | 1 |
During the year, the Company added 79 branches resulting in the branch network increasing to 252 from 173.
Shares Issued by Five Star Business
1. In 2014-15, Five-star Business had issued 12,00,000 equity shares of Rs.10 each at a premium of Rs. 120 per share on preferential basis to M/s Matrix Partners India Investment Holdings II, LLC.
2. In 2015-16, the company has issued ~ 5 Lakhs shares at Rs. 130 per share.
3. In 2016-17, the company has issued ~35 Lakhs shares at Rs. 322 per share.
4. In 2017-18, the company has issued ~49 Lakhs shares at Rs. 646 per share.
5. In 2018-19, the company has raised ~49 Lakhs shares for capital amounting to INR 619 Crores, which was led by TPG Capital, one of the largest private equity investors across the globe and from the existing investor’s Morgan Stanley, Norwest Venture Partners and Sequoia Capital. The deal has happened at approx. price of 1260 per share.
6. During the financial year 2019-20, the Company has:
a) issued and allotted 3,00,08,700 Secured, Listed, Rated, Redeemable, Taxable, Non-Convertible Debentures on
private placement basis on various dates, which were listed in BSE Limited.
b) allotted 1,78,450 fully paid-up Equity Shares of Rs.10/- each on various dates, pursuant to the Five-Star Associate Stock Option Scheme, 2015.
c) made a preferential issue of 13,32,262 fully paid-up Equity shares of Rs 10/- each which were allotted on 22nd July 2019 on a private placement basis.
d) made a preferential issue of 7,50,000 Partly Paid Equity shares of Rs 10/- each which were allotted on 25th
February 2020 on a private placement basis.
e) issued and allotted 9,67,597 Partly Paid Equity shares of Rs 10/- each on 21st March 2020 pursuant to a rights
issue.
Valuation of Five Star Business
1. In 2014-15, the company had total outstanding shares of 1.02 Crores, valuing the company at ~130 Crores.
2. In 2015-16, the company has total outstanding shares of 1.07 Crores, valuing the company at ~140 Crores.
3. In 2016-17, the company has total outstanding shares of 1.42651 Crores, valuing the company at ~450 Crores.
4. In 2017-18, the company has total outstanding shares of 1.91689 Crores, valuing the company at ~1200 Crores.
5. In 2018-19, the company has total outstanding shares of 2.38996 Crores, valuing the company at ~3000 Crores.
6. In 2019-20- American private equity firm TPG has made a follow-on investment worth $50 million in Five-Star Business Finance Ltd. Last year also, TPG has invested $100 million in the company. With this round, Five-Star said it is close to attaining a valuation of at least ~6600 Crores.
Book Value of Five Star Business
1. In 2014-15, the company has a Net-worth of 71.25 Crores and a number of shares are 1.02 Crores. So the book value was ~70.
2. In 2015-16, the company has a Net-worth of 91 Crores and a number of shares are 1.07 Crores. So the book value was ~85.
3. In 2016-17, the company has a Net-worth of 222 Crores and a number of shares are 1.42651 Crores. So the book value was ~155.
4. In 2017-18, the company has a Net-worth of 592 Crores and a number of shares are 1.91689 Crores. So book value was ~308
5. In 2018-19, the company has a Net-worth of 1365 Crores and a number of shares are 2.38996 Crores. So the book value was ~571.
6. In 2019-20, the company has a Net-Worth of 1943 Crores and a number of shares are 2.558 Crores. So the book value was ~760.
Business Highlights of last 5 years
Total Available Shares: | 500 |
Face Value: | ₹ 1 Per Equity Share |
ISIN: | INE128S01013 |
Lot Size: | 25 Shares |
Current Unlisted Share Price: | ₹ 550 Per Equity Share |
Particulars (in Crs) | Mar-15 | Mar-16 | Mar-17 | Mar-18 | Mar-19 | Mar-20 | Mar-21 | Sep-21 |
Sources of Funds | ||||||||
Share Capital | 10.2 | 10.7 | 14.2 | 19.16 | 23.89 | 25.58 | 25.64 | 29.01 |
Reserves | 61 | 80 | 210 | 580 | 1341 | 1918 | 2318 | 3424 |
Borrowings | 35 | 80 | 338 | 376 | 525 | 1284 | 2121 | 1640 |
Debt-Securities | 15 | 14 | 46 | 50 | 429 | 1078 | 1303 | 1215 |
OtherLiability | 42 | 40 | 86 | 146 | 31 | 47.42 | 49.84 | 66.69 |
Total Liabilities | 163 | 225 | 694 | 1171 | 2350 | 4353 | 5793 | 6375 |
Application of Funds | ||||||||
Fixed Assets | 0.7 | 2 | 5 | 5 | 8 | 11 | 8.4 | 8.33 |
CWIP | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Investments | 0.18 | 4 | 5 | 0 | 0 | 0 | 0 | 0 |
Cash & Bank Balances | 28 | 18 | 184 | 131 | 219 | 450 | 1267 | 849.76 |
Loans and Advances | 134 | 198 | 495 | 1007 | 2095 | 3830 | 4358 | 4644 |
Other Assets | 0.32 | 3 | 5 | 28 | 28 | 62 | 159.6 | 872.91 |
Total Assets | 163 | 225 | 694 | 1171 | 2350 | 4353 | 5793 | 6375 |
Particulars (in Crs) | Mar-15 | Mar-16 | Mar-17 | Mar-18 | Mar-19 | Mar-20 | Mar-21 | Sep-21 |
Revenue | 33.6 | 46 | 84 | 192 | 389 | 787 | 1050 | 611 |
Interest | 10.3 | 14 | 24 | 57 | 75 | 216 | 325 | 164 |
Employee Cost | 4.8 | 8 | 20 | 45 | 76 | 127 | 163 | 110 |
Impairment of Assets | 0 | 0 | 0 | 0 | 7 | 50 | 35 | 22 |
Other Expense | 2 | 5 | 12 | 25 | 25 | 34 | 36 | 20 |
Finance Profit | 15 | 19 | 27 | 65 | 206 | 360 | 491 | 295 |
Finance Margins | 47% | 42% | 33% | 34% | 52% | 46% | 46.76% | 48.28% |
Other Income | 0.6 | 2 | 3 | 16 | 18 | 40 | 35 | 0.5 |
Depreciation | 0.36 | 0.5 | 0.9 | 3 | 4 | 10 | 12 | 5 |
Profit before tax | 16 | 20 | 30 | 78 | 217 | 390 | 476 | 288 |
Tax | 5 | 7 | 11 | 22 | 62 | 87 | 117 | 71 |
Net Profit | 10 | 13 | 18 | 55 | 155 | 260 | 359 | 218 |
Shares | 29.01 | 29.01 | 29.01 | 29.01 | 29.01 | 29.01 | 29.01 | 29.01 |
EPS in Rs | 1 | 1.2 | 1.3 | 2.9 | 6.5 | 10.2 | 12.37 | 7.96 |
Particulars | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | Sep-21 |
NIM | 17% | 16% | 12% | 13% | 15% | 17.80% | 16.80% | 16% |
D/E | 0.7 | 1.04 | 1.71 | 0.71 | 0.7 | 1.21 | 1.47x | 0.47 |
ROE | 15% | 15% | 8% | 9% | 11% | 13.30% | 15.54% | 6.31% |
Book Value | 70 | 85 | 155 | 308 | 571 | 760 | 904 | 119 |
Particulars (In Crore) | Quarter Ended | Year Ended | ||
Mar-22 | Mar-21 | Mar-22 | Mar-21 | |
Income | ||||
Operating Revenue | 326 | 277 | 1,254 | 1,050 |
Other Income | 1.02 | 0.91 | 2.11 | 1.51 |
Total Income | 327 | 278 | 1,256 | 1,051 |
Expenditure | ||||
Impairment on financial instruments | 8 | 17 | 46 | 35 |
Employee Benefit Expense | 68 | 48 | 236 | 164 |
Other Expenses | 25 | 12 | 57 | 37 |
Operating Profit | 225 | 200 | 915 | 814 |
OPM | 69.02% | 72.20% | 72.97% | 77.52% |
Depreciation & Amortisation Exp | 4 | 3 | 12 | 11 |
Finance Cost | 63 | 82 | 301 | 328 |
Total Expenditure | 168 | 162 | 652 | 575 |
Profit Before Tax | 159 | 117 | 604 | 476 |
Tax Expenses | 41 | 28 | 151 | 117 |
Profit After Tax | 118 | 88 | 453 | 359 |
NPM | 36.20% | 31.77% | 36.12% | 34.19% |
EPS | 4.18 | 4.07 | 16.09 | 14.01 |
Please find below the procedure for buying Five-Star Business Finance Limited Unlisted Shares at UnlistedZone.
Please find below the procedure for selling Five-Star Business Finance Limited Unlisted Shares at UnlistedZone.
Lock-in period of Five-Star Business Finance Limited Unlisted Shares depends upon category of investors.
DIS - Delivery Instruction Slip is the way through which an investor can sell or transfer the Five-Star Business Finance Limited Unlisted Shares from his/her demat account to any other demat account. There are two Types of DIS Slip.
In the last 4-5 years, the unlisted share market has become quite big and as a result of that, the ticket size has reduced from usual 5-10 Lac to 35-50k in today's scenario. So, via our UnlistedZone platform, if somebody wants to buy Five-Star Business Finance Limited Unlisted Shares then minimum investment would be 35-50k.
Yes, buying and selling of unlisted shares in India is 100% legal.
If you sell your shares within 2 years, then you will have to pay Short-term Capital gain on unlisted shares. Short-Term Capital Gain is added in your Income. So, as per individual tax slab you need to pay capital gain tax.
If you sell your shares after 2 years, then you will have to pay Long-term Capital gain on unlisted shares LTCG is 20% with indexation benefits.
After listing of shares, the unlisted shares which you have bought through unlisted market, will be taxed at listed rates, if sold through exchange. So, taxes of listed market will be applicable. And, to calculate holding time, for determining LTCG or STCG, the purchase date of unlisted shares will be applicable.
If you buy Five-Star Business Finance Limited Unlisted Shares from UnlistedZone then these shares can checked in two ways. However, before we tell you the process of checking of shares, it is intimated that as per SEBI regulations, the shares can be transferred in demat account only.
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If you see the thesis of investment in the unlisted shares then it is being done mainly to take the advantage of IPO market. And, if the IPO plans of company get delayed due to market conditions or any other reason then demand suddenly drops in the market. The unlisted market works mainly on demand and supply and if there is no IPO news then getting exit would be difficult.
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We at UnlistedZone do the valuation based on 2 methods.
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We source shares either from the employees or initial investors looking to liquidate their Five-Star Business Finance Limited Unlisted Shares.
Pre-IPO shares means which are planning for an IPO in near future. So, all the shares which are traded on the platform are not Pre-IPO Shares. However, if the company's business is going good and then demand will always be there in the unlisted space, so even if the IPO does not come, the investors can easily liquidate their Five-Star Business Finance Limited Unlisted Shares in the unlisted market itself.
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Umesh Paliwal
Q4FY22 Results :
https://dyvmwwyqozzzb.cloudfront.net/main/WhatsApp-Image-2022-04-28-at-10.26.01-AM.jpeg
Umesh Paliwal
Q3FY22 Results : https://dyvmwwyqozzzb.cloudfront.net/main/Q3-Financials.pdf
NARSIREDDY83
Price
Market Wizard
Five-Star gives loans of about Rs 3.5 lakh on average to small businesses for 5-7 years of tenure.