Five Star Business Finance IPO - A South Based Star Rated NBFC: Reliance Securities

Reliance Securities' IPO Report

Five Star Business Finance Ltd. is one of the fastest growing non-banking financial company with assets under management of Rs 50.7 billion as of FY22 from Rs 44.5 billion as of FY21.

The company provides secured business loans to micro entrepreneurs and self-employed individuals. It has headquarter in Chennai, Tamil Nadu with strong presence in south India, with all of its loans are secured by the borrowers’ property, predominantly self-occupied residential property.

The company has a large and diversified mix of 53 lenders comprising a range of public banks, private banks, and financial institutions, as of FY22.

Five Star Business Finance reported an average return on equity of ~14% over FY20-22. The company leveraged its processes and technology to reduce the turnaround time from login to loan sanction from an average of 20 days in FY18 to 17 days, and 15 days in FY19, and FY20 respectively.

There has been an increase in the turnaround time during FY21 and FY22 due to onset of Covid-19 and the related periodic disruptions such as the lockdowns. However, during Q1 FY23, it reduced the turnaround time on the loans disbursed to 18 days.

Five Star Business Finance is coming out with an initial public offering of Rs 19.6 billion comprising fully offer for sale of 41.4 million shares.

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