Indo Star Capital Finance: Information Analysis

Note: This article has no recommendation to either buy or avoid this IPO. Instead, we have presented all the relevant information based on which you can make your own decision. Indo Star Capital Finance is a part of Everstone Group which is a private equity firm with focussed operations in India and Southeast Asia. Set up in 2009 Indo Star initially focussed only on corporate lending. It currently operates in four segments of lending which include corporate lending, SME lending, vehicle finance and housing finance. The corporate and SME lending accounts for 76.7 per cent and 22.7 per cent of its loan book respectively. These two segments have a combined customer base of 897 customers. It has made a recent foray into housing finance and vehicle finance businesses. The two segments combined comprise 1 per cent of the loan book and have a customer strength of just 357. As of December 31, 2017 the size of its loan book stood at Rs 5,147 crore. Pros Entry in New Business Lines Its entry into housing finance and vehicle finance will be future drivers of its growth. Its housing finance division comprises of two business lines: Affordable housing (started in September, 2017) and Retail housing (started in March, 2018). It also entered into vehicle finance business in November, 2017 which will further add to its growth. Diversification Increasing focus on diversifying its product mix will reduce its dependence on one business line. It has gradually decreased its dependence on corporate lending from 99.8 per cent in FY15 to 76.8 per cent as on December 2017 of total credit exposure. It is expected to reduce further with entry into new businesses. Growth Its loan book and net interest income have grown at a healthy rate of 25.2 per cent and 19 per cent during FY13 to December 2017. Cons Concentration As of December, 2017, 77 per cent of its total credit exposure was towards corporate lending. It's exposure to real estate sector is quite high as it comes up to 41.6 per of its total credit exposure. It has disbursed 94 per cent of its real estate loans in Mumbai alone. Moreover, its top 10 largest performing loans account for 43.1 per cent of total credit exposure in this segment. NPA(Non Performing Assets) It has witnessed increasing trend in NPAs. Its gross NPA have risen from 0.2 p