Why the Five-Star Business Finance Share Price is on the Rise
Five-Star Business Finance has been in business for nearly three decades and is one of the leading non-banking finance companies in India. The company has been steadily increasing its market share and has been gaining attention from investors due to its strong financials and growth potential. In recent years, the Five-Star Business Finance share price has been on the rise, with many investors reaping the benefits of this flourishing company. In this article, we will discuss the reasons behind this rise in share prices.
Strong Financials and Growth Prospects
Five-Star Business Finance has consistently delivered strong financial performances, which have been the main driver for its increasing share prices. From 2017 to 2021, the company’s revenue grew at a CAGR of 67%, while the profit after tax (PAT) grew at a staggering CAGR of 120%. These impressive numbers are not without reason. Five-Star Business Finance operates in the MSME (Micro, Small, and Medium Enterprises) sector, which is a significant contributor to India’s GDP. The company has managed to grow quickly by focusing on this sector and tapping into its growth potential, which has translated into healthy financials.
Expansion through Acquisitions
Five-Star Business Finance has not only been growing organically but also through strategic acquisitions. In 2020, the company acquired a majority stake in a Tamil Nadu-based NBFC (Non-Banking Financial Company) called Namra Finance. This acquisition helped the company expand its reach and deepen its presence in Tamil Nadu, a state that has a massive MSME presence. The company has also acquired a 22.4% stake in Coimbatore-based non-banking financial firm – Northern Arc.
Through these acquisitions, Five-Star Business Finance has not only expanded its footprint but also diversified its portfolio, which has led to higher investor confidence and increased share prices.
Robust Risk Management Practices
The company’s success can also be attributed to its robust risk management practices. Five-Star Business Finance has implemented strict underwriting processes, which enables it to lend to MSMEs with a low risk profile. Moreover, the company has also invested heavily in its collection infrastructure to ensure timely collections of loans, thereby reducing risks.
The pandemic has also affected the business, but the strict underwriting practices helped the company to recover well. Today, as the pandemic recedes, there are expectations that Five-Star Business Finance will be able to grow its loan book, which would translate into an increase in share prices.
Conclusion
In conclusion, Five-Star Business Finance’s increasing share price can be attributed to its strong financials, growth prospects, strategic acquisitions, and robust risk management practices. With a focus on the MSME sector, the company has been able to capture the growth potential of this sector, which has translated into healthy financials and investor confidence. As the company continues to grow, it is expected that the share price will continue to rise, making it an attractive bet for investors interested in India’s non-banking financial sector.
