Five-Star Business Finance Ltd - Stock Valuation and Financial Performance

The Company was incorporated as Five-Star Business Credits Private Limited at Chennai, Tamil Nadu as a private limited company under the Companies Act, 1956, pursuant to a certificate of incorporation dated May 7, 1984, issued by the Registrar of Companies, Tamil Nadu at Chennai (RoC). The Company was converted from a private limited company to a public limited company pursuant to board resolution dated September 7, 1988 and special resolution passed by the Shareholders at the EGM dated October 3, 1988. Consequently, the name of the Company was changed from ‘Five-Star Business Credits Private Limited’ to ‘Five-Star Business Credits Limited’ and the certificate of incorporation was amended on October 3, 1988. The name of the Company was subsequently changed to ‘Five-Star Business Finance Limited’ pursuant to board resolution dated March 25, 2015 and special resolution passed by the Shareholders at the EGM held on April 12, 2016, and a fresh certificate of incorporation consequent upon change of name was issued by the RoC on May 13, 2016.

Five Star Business Finance is an NBFC-ND-SI (Non-Banking Finance Company) providing secured business loans to micro-entrepreneurs and self-employed individuals. It is headquartered in Chennai, Tamil Nadu with a strong presence in south India and all of its loans are secured by its borrowers’ property, predominantly being SORP. The company has developed a business model that is predicated on arriving at an appropriate risk framework, with the optimal instalment to income ratio to ensure that its customers have the necessary means to repay the loan after meeting their regular obligations and other event-based capital requirements. The company’s growth is primarily volume led through increasing its customer base while keeping the ATS stable, and it expects this to continue.

The company started operations in Chennai, Tamil Nadu and have increased the scale of its operations through growth in number of branches by adopting a calibrated strategy of contiguous expansion across geographies where there is substantial demand for its offering. Such contiguous expansion is underpinned by utilizing neighboring branches to evaluate local credit environments combined with its focus on hiring local staff with an understanding of the catchment area, strong local personal and professional networks and the market.

Business area of the company

The company is a Systemically Important Non-Deposit taking Non-Banking Financial Company (NBFC-ND-SI) providing secured business loans to micro-entrepreneurs and self-employed individuals, each of whom are largely excluded by traditional financing institutions.

Key events

• 1984: Incorporation of the Company.
  
• 1988: Conversion from a private limited company to a public limited company.
  
• 2006: Rearranged portfolio for advances by moving focus to financing in immoveable properties.
  
• 2010: Loan book crossed Rs 250.00 million.
  
• 2013: Opened 25th branch.
  
• 2014: Expanded geographical presence outside Tamil Nadu to Karnataka and Andhra Pradesh.
  
• 2014: Investment of Rs 170.00 million by Matrix Holdings.
  
• 2014: Loan book crossed Rs 1,000 million.
  
• 2015: Investment of Rs 156.00 million by Matrix Holdings.
  
• 2017: Crossed 100 branches.
  
• 2017: Expanded geographical presence to Telangana.
  
• 2020: Crossed 200 branches.
  
• 2021: Loan book crossed Rs 40,000 million.
  
• 2022: Loan book crossed Rs 50,000 million.