Five-Star Business Finance Limited Unlisted Shares

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

During the year, the Company added 79 branches resulting in the branch network increasing to 252 from 173.

State	No. of Branches(2019)	No. of Branches(2020)	No. of Branches(2021)	No. of Branches(2022)
Madhya-Pradesh	7	26	27	37
Maharashtra	2	4	4	4
Telangana	31	36	38	45
Andhra Pradesh	46	64	68	79
Karnataka	11	30	32	33
Tamilnadu	76	88	89	98
Chhattisgarh	0	3	3	3
UP	0	1	1	1

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

Five-Star Business Finance Limited Unlisted Shares Details:

Total Available Shares:	500
Face Value:	₹ 1 Per Equity Share
ISIN:	INE128S01021
Lot Size:	25 Shares
Current Unlisted Share Price:	₹ 545 Per Equity Share

Promoters And Management:

(a) D Lakshmipathy – Chairman & Managing Director He is an Engineering graduate from Madras University and hails from a business family. Before joining Five-Star he was the Executive Director at RKV Finance Limited, which was subsequently amalgamated with Five-Star. In 2002 he joined the Board of FiveStar as Executive Director and his wide exposure in lending to Small Business customers helped him to develop a similar advance portfolio at Five-Star with great success. He is responsible for the more expansive branch presence of the company in the last 9 years, growing from 6 branches in 2009 to about 175 as at March 2019 currently spread across Tamil Nadu, Andhra Pradesh, Telangana, Karnataka, Maharashtra & Madhya Pradesh and has helped grow the portfolio to over INR 2000 Cr. (b) A Ramanathan – Independent Director He is a retired Chief General Manager from NABARD. His expertise lies in institutional development, organisational development, organisational behaviour, small business development, training need assessment, training techniques etc. He has more than 35 years of rich experience in the banking industry. (c) Bhama Krishnamurthy – Independent Director She was Country Head and Chief General Manager of SIDBI. She has closely dealt with multilateral and bilateral agencies in close co-ordination with the Government of India. Her areas of specialisation include, inter-alia, handling of the Human Resources Development Division covering recruitment, training and promotion aspects. She was also associated with drafting of CSR Policy guidelines for SIDBI.

Shareholding Pattern:

Shareholding Pattern as on 31.03.2022

Financials of Five-Star Business Finance Limited Unlisted Shares:

A) Balance Sheet

Particulars (in Crs)	Mar-15	Mar-16	Mar-17	Mar-18	Mar-19	Mar-20	Mar-21	Mar-22
Sources of Funds
Share Capital	10.2	10.7	14.2	19.16	23.89	25.58	25.64	29.13
Reserves	61	80	210	580	1341	1918	2318	3681
Borrowings	35	80	338	376	525	1284	2121	1550
Debt Securities	15	14	46	50	429	1078	1303	1000
OtherLiability	42	40	86	146	31	47.42	49.84	83
Total Liabilities	163	225	694	1171	2350	4353	5793	6343
Application of Funds
Fixed Assets	0.7	2	5	5	8	11	8.4	12
CWIP	0	0	0	0	0	0	0	0
Investments	0.18	4	5	0	0	0	0	248
Cash & Bank Balances	28	18	184	131	219	450	1267	879
Loans and Advances	134	198	495	1007	2095	3830	4358	5102
Other Assets	0.32	3	5	28	28	62	159.6	102
Total Assets	163	225	694	1171	2350	4353	5793	6343

B) Profit & Loss

Particulars (in Crs)	Mar-15	Mar-16	Mar-17	Mar-18	Mar-19	Mar-20	Mar-21	Mar-22
Revenue	33.6	46	84	192	389	787	1050	1256
Interest Cost	10.3	14	24	57	75	216	325	306
Employee Cost	4.8	8	20	45	76	127	163	236
Impairment of Assets	0	0	0	0	7	50	35	45
Other Expense	2	5	12	25	25	34	36	57
Net Profit	10	13	18	55	155	260	359	453
Shares	29.01	29.01	29.01	29.01	29.01	29.01	29.01	29.13
EPS in Rs	1	1.2	1.3	2.9	6.5	10.2	12.37	16

C) Other Ratios

Particulars	2015	2016	2017	2018	2019	2020	2021	2022
NIM	17%	16%	12%	13%	15%	17.80%	16.80%	18.6%
D/E	0.7	1.04	1.71	0.71	0.7	1.21	1.47	0.68
ROE	15%	15%	8%	9%	11%	13.30%	15.54%	12%
Book Value	70	85	155	308	571	760	904	127

Note: On 8th Oct 2021, company has done Sub-division of equity shares of face value of ₹10 each to equity shares of face value of ₹1 each.

D) Financials of Q1FY23

Particulars (In Cr.)	Quarter Ended		Year Ended
Particulars (In Cr.)	Jun-22	Jun-21	Mar-22
Income
Operating Revenue	338	302	1,254
Other Income	1.09	0.24	2.11
Total Income	339	303	1,256
Expenditure
Impairment on Financal Instruments	-0.41	18	46
Employee Benefit Expense	72	52	236
Other Expenses	13	10	57
Operating Profit	253	222	915
OPM	74.97%	73.51%	72.97%
Depreciation & Amortisation Exp	4	3	12
Finance Cost	65	86	301
Total Expenditure	153	169	652
Profit Before Tax	186	134	604
Tax Expenses	47	34	151
Profit After Tax	140	100	454
NPM	41.42%	33.11%	36.20%
EPS	4.79	3.73	16.09

Key Highlights of FY18-19 a) Disbursed an amount of about 1,500 Crores to about 46,000 borrowers, resulting in an increase in the borrower base from around 34,000 to more than 73,000. b) Profit After Tax almost tripled from about INR 53 Crores in FY 2018 to about INR 157 Crores during the year. c) Gross NPA of 0.9%; arguably the best portfolio quality achieved among companies operating in this borrower segment. d) Achieved a rating upgrade from A- (A Minus) to A (Stable), despite the industry headwinds. e) Provided employment to close to 2,000 staff. Key Highlights of FY19-20 a) Disbursed an amount of about 2,400 Crores to about 79,000 borrowers, resulting in an increase in the borrower base from around 73,000 to more than 140,000. b) Increase in Assets under Management (AUM) from INR 2,113 Cr to INR 3,892 Cr, registering a growth of over 84%. c) Profit After Tax increased from about INR 157 Crores during the previous year to about INR 261 Cr INR during the year d) Gross NPA of 1.36%; while this is higher than what would have materialized in the absence of COVID-19, this is still one of the best asset qualities among companies operating in this borrower segment e) Provided employment incrementally to almost 2,000 staff and closed with a staff headcount of about 4,000 f) Incremental debt availment of INR 1,800 Cr during the year (as against INR 636 Cr in the previous year), despite the adverse sentiments that existed towards NBFCs during the year g) Additional equity capital of INR 315 Cr was infused by TPG Capital, reinforcing their confidence in your company. Key Highlights of Fy21-22 1. Five Star Business Finance has increased its loan disbursement to INR 1,756.24 crores for the fiscal year ending March 31, 2022, from INR 1,245.05 crores the previous fiscal year. 2. Five Star Business Finance branch network increased to 300 from 262 during the fiscal year ending March 31, 2022, thanks to the addition of 38 new locations. 3. Total loan assets under management increased by 14 percent to INR 5,067 crores as of March 31, 2022, from INR 4,445 crores the previous fiscal year. 4. Five Star Finance has maintained strong asset quality for the fiscal year ended March 31, 2022, with Gross NPAs of 1.05 percent, which is among the best in the industries. 5. During the fiscal year ended March 31, 2022, Five Star Business Finance funding, both on the equity and debt sides, was very encouraging. During the first quarter of the fiscal year, it has raised new equity capital by adding marquee names like KKR and TVS Capital to its shareholder list. As part of this fundraising round, company has provided an attractive exit to one of the earliest private equity investors-NHPEA Chocolate Holding B.V. (Morgan Stanley) in addition to the 518 crores of capital raised. Five Star Finance Annual Report 2022 Five Star Finance Annual Report 2021 Five Star Finance Annual Report 2020 Five Star Finance Annual Report 2019 Five Star Finance Annual Report 2018 Five Star Finance Annual Report 2017

Company Address:

New No 27, Old No 4, Taylor’s Road, Kilpauk, Chennai - 600010 CIN: U65991TN1984PLC010844

Frequently Asked Questions:

Please find below the procedure for buying Five-Star Business Finance Limited Unlisted Shares at UnlistedZone.

1. You confirm booking of Five-Star Business Finance Limited Unlisted Shares with us at a trading price.
2. You provide your client master report (ask the broker if not available) along with PAN Card and Cancelled Cheque in case you are not transferring funds from the bank account as mentioned in the CMR Copy. These are KYC documents required as per SEBI regulations.
3. We will provide the bank details.
4. You need to transfer funds in that account.
5. Payment has to be done in RTGS/NEFT/IMPS CHEQUE TRANSFER. No CASH DEPOSIT.
6. Payment has to be done from the same account in which shares are to be credited.
7. We will transfer the shares in 24 hours if funds are credited before 2 pm.

Important Note: Please note that the lock-in period for selling Five-Star Business Finance Limited Unlisted Shares is 6 months after listing. Hence you can’t sell Five-Star Business Finance Limited Unlisted Shares which you bought in Pre-IPO for 6 months after its listing. i.e. You can sell it only after 6 months calculated from the listing date. For any queries, please contact us at sales@unlistedzone.com

Please find below the procedure for selling Five-Star Business Finance Limited Unlisted Shares at UnlistedZone.

1. We will confirm our buying price of Five-Star Business Finance Limited Unlisted Shares.
2. We will give you our client master report and you will transfer the Five-Star Business Finance Limited Unlisted Shares to our demat account.
3. We will ask for bank details of yours once the Five-Star Business Finance Limited Unlisted Shares are received in our demat account..
4. We will transfer the funds in your bank account within 24 hrs of receiving the Five-Star Business Finance Limited Unlisted Shares.
5. Payment will be made in RTGS / NEFT / CHEQUE TRANSFER/IMPS. No CASH DEPOSIT.
6. Payment will be given in the same account which is linked to demat account or you need to provide the cancelled cheque shows your name to verify. As per SEBI regulations, the transfer of funds in the third party account is not legal and our policy refrain us from doing so.

Note: The price at which we are buying the share is fixed for 3 days. If you cant sell your stock within 3 days, then the price of that day will be applicable when we receive shares in our demat.

Lock-in period of Five-Star Business Finance Limited Unlisted Shares depends upon category of investors.

1. Venture Capital Funds or Foreign Venture Capital Investor - lock-in Period of 6 months from the date of acquisition of Five-Star Business Finance Limited Unlisted Shares.
2. AIF-II - There is no locking period.
3. Other Investors (include Retail, HNIs or Body Corporate) lock-in Period of 6 months from the date of listing of IPO of Five-Star Business Finance Limited Unlisted Shares.

This new SEBI rule was introduced in the month of August-2021, wherein the SEBI has reduced the lock-in period previously from 1 year to 6 months to encourage more and more funds to be invested in startups which are going to public or IPO in near future. Reduction of lock-in is seen as big step and after that many PMS funds are advising their clients to invest in Pre-IPO shares to get the benefit of early stage investment.

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.

1. Offline-DIS - This is an offline mode of transfer of shares wherein the investors needs to fill DIS form and give it to their broker for transferring the shares. Following are the fields which are required to be filled.
- a. ISIN number of Five-Star Business Finance Limited Unlisted Shares.
- b. Name of Five-Star Business Finance Limited Unlisted Shares
- c. Quantity of Five-Star Business Finance Limited Unlisted Shares
- d. Cosideration Amount
- e. Target DP ID and Client ID
- f. Annexure
2. Online DIS - Some of the broker these days gives facility of transferring the Five-Star Business Finance Limited Unlisted Shares via online DIS. So, please check with your broker whether such facility is available or not. For example: Angel Broking proivdes the facility of Online-DIS from its platform. As an investor he/she simply needs to add a beneficiary into it and send the Five-Star Business Finance Limited Unlisted Shares by filling the details similar to Ofline-DIS.

Read our article to understand more about this. https://unlistedzone.com/how-do-i-sell-my-unlisted-shares/

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.

Check credit of Five-Star Business Finance Limited Unlisted Shares Instantly?

1.You can download the NSDL or CDSL application from google play-store and check. If you want to check whether your stock broker is registered with NSDL or CDSL then check the following procedure.
By carefully examining the number format of Demat Account we can easily identify whether the stock broker is registered with CDSL or NSDL.
Demat Account = DP ID + Client ID. (16 Characters )
"DP ID is the unique identification of the Broker. Every broker gets a unique number from CDSL or NSDL.By carefully examining the number format of Demat Account we can easily identify whether the stock broker is registered with CDSL or NSDL.
Client ID is the unique identification of the Client. Every client gets this unique number which represents his/her portfolio.
In CDSL, all these characters are numbers (1234567891234567) first 8 digits are DP ID and next 8 digits are Client Id whereas in NSDL the first two characters are letters which are in accordance with the country that you are from (IN12345678912345), then 6 unique digits for Broker and next 8 digits are client ID.
Example:
CDSL = 12345678(DP ID) and 91234567(Client ID).
NSDL = IN123456 (DP ID) and 78912345(Client ID).
Check in brokers application?
Credit of Five-Star Business Finance Limited Unlisted Shares can be checked in brokers application as well but it takes T+2 days to show the shares.

The Five-Star Business Finance Limited Unlisted Shares are credited in demat account same day of transferring funds in our company's bank account.

The price of Five-Star Business Finance Limited Unlisted Shares can be checked in two ways. First, you can join our telegram channel where on daily basis we share the latest prices of all the unlisted shares in the morning and secondly, you can register on UnlistedZone.live platform to see the historical graphs and prices of all the shares at one place.

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.

"UnlistedZone is India's fastest and leading marketplace to buy and sell unlisted shares. In the last 3 years, we have already served more than 1 million users on the platform. The total transactions value done from the platform is already more than 100 Crores. The name of our Co-founders Mr. Umesh Paliwal and Dinesh Gupta publish regularly in leading newspapers like MoneyControl, Business-Standard, ET etc for their views on IPO and Unlisted market. In the last 3 years, UnlistedZone has made a good name for itself in the industry and gained a trust of their users. So, the new investors should not be worried about any kind of fraud that is mostly happens with unkown brokers in the market while doing investment with UnlistedZone."

We at UnlistedZone do the valuation based on 2 methods.

1. We check the last funding that is being done in the Five-Star Business Finance Limited Unlisted Shares to ascertain the benchmark valuation.
2. If there is no funding happened in the company, then we try to find a business similar to Five-Star Business Finance Limited Unlisted Shares in the listed space and do comparison method to ascertain the valuation.

As an investor in the unlisted space, we would always recommend that you must check all the risk parameter carefully before investing in the unlisted space.

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.

Rules and regulations of SEBI are applicable in the Unlisted space like lock-in period of 6 months, paying of Stamp Duty, and DP Charges for every transaction etc. However, to become an unlisted broker there is no such regulation by SEBI as of yet.

For tracking news and other information about Five-Star Business Finance Limited Unlisted Shares, one can visit our website wherein we post news and other information on daily basis and one can also join our telegram channel.

Discussion on Five-Star Business Finance Limited Unlisted Shares:

4 Comments

Umesh Paliwal

11:32 AM, 28 April 2022

Q4FY22 Results :

https://dyvmwwyqozzzb.cloudfront.net/main/WhatsApp-Image-2022-04-28-at-10.26.01-AM.jpeg

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Umesh Paliwal

1:23 PM, 26 April 2022

Q3FY22 Results : https://dyvmwwyqozzzb.cloudfront.net/main/Q3-Financials.pdf

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NARSIREDDY83

5:45 PM, 13 October 2021

Price

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Market Wizard

5:01 PM, 20 August 2020

Five-Star gives loans of about Rs 3.5 lakh on average to small businesses for 5-7 years of tenure.

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Five-Star Business Finance Limited Unlisted Shares

Five-Star Business Finance Limited Unlisted Shares Details:

Promoters And Management:

Shareholding Pattern:

Financials of Five-Star Business Finance Limited Unlisted Shares:

Company Address:

Frequently Asked Questions:

Discussion on Five-Star Business Finance Limited Unlisted Shares:

4 Comments

Umesh Paliwal

Umesh Paliwal

NARSIREDDY83

Market Wizard

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