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ICICI Securities Report
Five Star Business Finance Ltd.'s FY23 annual report provides an insight on how it is progressing towards its vision of 'reaching the unreached through suitable credit solution' and capturing the Rs 22 trillion micro, small and medium enterprise lending opportunity.
Assets under management growth reviving to 37% in FY23 versus 14% compound annual growth rate between FY20-22 (Covid impact) is a testimony to its agility and business resiliency.
In a high human touch model, adherence to standard-operating-process becomes a prerequisite, and negligible frauds / mishandling of cash in FY23 (and even in previous years) reflects its tight control on processes and staff quality.
Notably, gross stage-III increased marginally to 1.36% in FY23 versus 1.06% in FY22 despite the implementation of daily DPD recognition from October 2022.
Maintain 'Buy' with an unchanged target price of Rs 860, valuing the stock at 4.5 times on September-24 book value per share.
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