Five Star Business Finance Ltd. witnessed a significant block trade on the National Stock Exchange (NSE) recently, highlighting investor interest in the company's shares.

Block Trade Details

The block trade, valued at approximately Rs. 15.98 crores, involved the exchange of about 304,149 shares at a price of Rs. 525.30 per share. This transaction underscores the substantial volume of Five Star Business Finance shares changing hands in a single trade.

Recent Corporate Action

In a separate development, Five Star Business Finance has recently made an important corporate announcement. According to the company's filing with the stock exchanges:

• The Business & Resource Committee of the Board has allotted 19,990 equity shares with a face value of Rs. 1.00 each.
• This allotment is pursuant to the exercise of stock options under the Five-Star Associate Stock Option Scheme, 2018.
• As a result of this allotment, the company's paid-up share capital has increased from Rs. 29,44,48,830 to Rs. 29,44,68,820.
• The total number of equity shares has correspondingly risen from 29,44,48,830 to 29,44,68,820.

Employee Stock Option Details

The recent equity allotment includes shares issued at various exercise prices:

The company realized a total of Rs. 12,53,694 from the exercise of these options.

Financial Performance

According to the unaudited financial results for a recent quarter, Five Star Business Finance reported:

• Basic Earnings Per Share (EPS): Rs. 9.04
• Diluted Earnings Per Share (EPS): Rs. 9.02

These corporate actions and financial indicators provide insight into Five Star Business Finance's ongoing operations and equity structure. The recent block trade, coupled with the employee stock option exercise, suggests continued market interest in the company's shares.

Five Star Business Finance reported subdued results for the first quarter, with profit after tax (PAT) reaching INR 266.00 crores, representing a 6% year-on-year growth but a 5% decline quarter-on-quarter. The company faced asset quality challenges, primarily due to overleveraged customers in the below INR 3.00 lakh loan segment.

Key Financial Highlights

• Assets Under Management (AUM) grew by 20% year-on-year and 5% quarter-on-quarter, reaching INR 12,500.00 crores.
• Collection efficiency dropped to 96.3% as borrowers struggled with multiple loans from microfinance and personal loan lenders.
• Credit costs rose from 0.7% to 1.3%, impacting the company's profitability.
• Return on Assets (ROA) stood at 7.24%, while Return on Equity (ROE) was 16.57%.

Strategic Shifts and Outlook

Chairman and Managing Director Lakshmipathy Deenadayalan stated, "We admit we have slipped from our own standards, but let me assure you all, Five-Star's secured lending product with better underwriting and good collection infrastructure, we'll be the last to get hit and first to bounce back."

The company is implementing several strategic changes to address the current challenges:

1. Shifting focus towards INR 5-10 lakh ticket sizes while maintaining its sweet spot in the INR 3-5 lakh segment.
2. Avoiding highly indebted customers and risky locations, particularly in the below INR 3 lakh loan category.
3. Strengthening the collection team by adding 200 collection officers.
4. Maintaining the 25% growth guidance but revising credit cost guidance to 1.20-1.25%.

Management Changes

CEO Rangarajan Krishnan announced his resignation effective August 14, to pursue entrepreneurial activities. Lakshmipathy Deenadayalan will take charge of operations, supported by a strong second-line management team across all functions.

Geographic Performance

• Tamil Nadu and Telangana continue to perform well, with NPAs below the company average.
• Karnataka and Andhra Pradesh faced challenges due to local ordinances and higher exposure to smaller ticket sizes.

Future Outlook

The company expects stabilization by Q2 end, with improvement anticipated from the second half. Five Star Business Finance remains confident in its ability to maintain a 25% CAGR in loan book growth over the next three years, with profit growth projected at 15-18%.

As the company navigates through current challenges, it aims to leverage its secured lending model and improved underwriting practices to regain its strong performance metrics in the coming quarters.