The
IPO of Indostar Capital Finance Ltd (NSE: INDOSTAR) was subscribed 41 per cent
on the first day of the bidding. The stock is area of interest to many
investors, this article is going to brief you about the company Indostar. What
exactly company does, who they are so that you have a clear picture of it
whether you should be investing in it or not.
Incorporated
in 2009, INDOSTAR is Mumbai based non-banking finance company (NBFC) registered
with the RBI as a systemically non-deposit taking company which is primarily
engaged in providing structured term financing solutions to corporate and
loans to small and medium enterprise borrowers in India. Recently, they have
expanded to offer vehicle finance and housing finance products through
subsidiary IndoStar Home Finance Private Limited.
Looking
into the Capitalization of IndoStar, the Net Worth of it was 1,903 Crore as on
March 31, 2017. And talking whether this firm performance they were reporting
PAT of 211 Crore in FY17. The Return on Equity for primary shareholders was up
to 12.2% in FY17. Since it started operations in 2011, IndoStar’s net profit has
grown to over Rs210 crore at a CAGR of 31%. In March 2017, the company had a
loan book of Rs 5,247 crore and a Net NPA of 1.2 %
Talking
about the operations of IndoStar, it conducts its retail operations through ten
branches across Mumbai, Delhi, Chennai, Bengaluru, Hyderabad, Jaipur, Surat,
Ahmedabad, Pune and Indore and central support office in Mumbai. The lenders of
the company include, among others, 14 public sector banks, 13 private sector
banks, 21 mutual funds and four insurance companies and other financial
institutions. The distribution network includes approximately 210 personnel in
its in-house sales team, and approximately 648 third-party direct sales
associates (DSAs) and other third-party intermediaries.
The
company operates four principal lines of business, namely corporate lending,
SME lending, vehicle financing and housing financing.
Corporate
lending: INDOSTAR intends to continue to grow its Total Credit Exposure by
following the credit parameters that has yielded its current high asset quality
As it grow its presence across India, it expects to have opportunities to grow
Total Credit Exposure in newer locations outside the MMR as well. It will also
continue to carefully evaluate opportunities and monitor Total Credit Exposure
in portfolio from its corporate office in Mumbai.
SME
lending: INDOSTAR plan to leverage the potential of existing branches to expand
customer base.
Vehicle
finance: INDOSTAR has hi red professionals with significant relevant experience
and increased the number of its branches offering vehicle finance products in
order to develop its vehicle finance business. Its key focus in vehicle finance
will be on used commercial vehicles particularly the vehicles which are in the
range of three to five years. It intends s to leverage the relationships of its
team members with small freight operators, medium freight operators and light
and medium commercial vehicle owners to grow its loan portfolio. It also seeks
s to increase its customer base and revenues by strengthening its presence at
dealerships and by engaging with dealers of a range of OEMs.
Housing
finance: INDOSTAR’s housing finance business comprises of two business lines,
namely
- affordable housing finance, which commenced operations in September 2017, and
- retail housing finance, which commence d operations in March 2018.
It
also intends to leverage its relationships with real estate developer customers
to develop its housing finance business line, by either gaining access to
purchasers of housing property and/or by becoming a preferred financier for
such real estate developers. As part of affordable housing finance, its focus
will be on providing loans to self - employed individuals in metro cities and
other urban markets.
INDOSTAR
has financial services veteran R Sridhar its Executive Vice Chairman and CEO.
Sridhar, who has over three decades of experience in financial services,
oversee IndoStar’s growth across its lending businesses, including Corporate
lending, SME lending and a 100% - owned housing finance subsidiary, IndoStar
Home Finance Pvt. Ltd and other asset financing businesses. Sridhar, who has
worked with the Sriram Group since 1985, Sridhar, was the Managing Director
& CEO of Shriram Transport Finance Company Limited, Mumbai, (STFC) since
2000. Under his leadership, STFC became India’s largest asset financing NBFC
with assets under management growing from Rs 5,000 crore to over Rs 40,000
crore. Sridhar has served as the Chairman of the Finance Industry Development
Council (FIDC), a self - regulatory organization for NBFC - AFCs. He has also
won numerous awards including the EY “Entrepreneur of the year – Manager” Award
in 2011
INDOSTAR
plans to selectively expand its business operations, including sourcing and
sale of its products, into regions where it expect s increasing urbanization,
commercial activity and household incomes to result in demand for its various
loan products. It currently expect s that a significant portion of its
geographic expansion will include tier I, tier II and tier III cities in the
northern, southern and western regions of India. It intend s to grow its
branches in fifteen key states across India and currently expect to have
approximately 130 branches by June 2018 out of which approximately 100 will be
focused on vehicle finance business and remaining 30 for SME lending and
housing finance business. It also plans to utilize the hub - and - spoke model
as part of its expansion plans in an effort to leverage common infrastructure
and optimize operational efficiency.
Recent Updates:
- The Authorised Share Capital of the Company is INR 110 Crore in recent EGM,
- APPOINTMENT OF MR. DINESH KUMAR MEHROTRA, HEMANT KAUL and MS. NAINA KRISHNA MURTHY AS AN INDEPENDENT DIRECTOR OF THE COMPANY.