BSE-listed Star Housing Finance has given spectacular returns to its investors in the long as well as short term. The stock which was listed in 2015 March, has risen 980 percent from its all-time low of ₹15, hit in April 2015. Meanwhile, in the last 5 years, it has delivered a 135 percent return to its shareholders.
It has also given strong returns in recent times despite massive corrections across broader markets. The small-cap firm has advanced nearly 88 percent in 2022 YTD and has added 73 percent in the last 1 year.
Just in the last one month, this multi-bagger stock rose around 22 percent while in the past 6 months, it has jumped from around ₹95 to ₹160, rising 65 percent in this period.
Star Housing Finance is a housing finance company, which is engaged in the business of providing housing loans and property loans. The company is primarily engaged in the business of providing loans to individuals, corporate and developers for the purchase, construction, development and repair of houses, apartments and commercial properties in India.
In the first quarter of FY23 (Q1FY23), the company's net profit soared 474 percent to ₹1.36 crore from ₹24 lakh in the year-ago quarter led by a huge surge in disbursements. Its total income also rose 38 percent to ₹6.17 crore in Q1FY23 from ₹4.5 lakhs in Q1FY22.
For the quarter under review, the disbursements came in at ₹22.56 crore, which is the highest quarterly disbursement to date. It zoomed nearly 800 percent from ₹2.5 crore in the year=ago period. The HFC operationalised co-lending tie-ups with Capital India Home Loans and Singularity Credit, resulting in AUM (assets under management) growth of 23 percent in the June quarter to ₹116.32 crore. The management noted that it is looking forward to growing the AUM with a CAGR of 100 percent going ahead led by expansion across geographies.
"Star HFL is now set to grow. This is validated by our business performance in Q1 FY2022-23 and the same getting translated in terms so financial numbers. We are happy to have registered action in terms of traction across locations, progress on funding, and both debt and equity. We are continuing to invest in creating capacity, including location expansion, manpower onboarding and digitisation. We look forward to build-up and sustaining the momentum of Q1 into the remaining quarters. We see our capacity getting utilised to the fullest through FY’2022-23. We look forward to expanding across our business areas from hereon. We shall invest in technology to develop one-click digital lending capabilities. We shall continue to strengthen our funding machinery through debt/equity and make the Company ready for institutional equity from domestic/international market," said Ashish Jain, MD of Star HFL post its earnings.
The company also recently raised ₹21.6 crore through the issuance of preferential shares. This equity infusion is a part of a series of capital raises in the Company, the last being done in FY22 and has further strengthened the capital adequacy and moderated the leverage levels of the company.
Speaking on the importance of this fundraise, Kalpesh Dave, Head Corporate Planning and Strategy at Star Housing Finance said, "This capital infusion makes Star HFL ready to get re-rated as the deployment shall be for AUM scale up in rural geographies. In the interim, with this raise Star HFL has met the minimum net worth quantum and shall await to meet the period & other criteria needed for listing on the NSE platform, subject to relevant regulatory/statutory approvals. In line with a business plan, the Company has initiated actionable for the next capital raise, subject to all approvals so as to cross a net worth of ₹100 crore in the current financial year. We look forward to participation by like-minded investors as the Company charts its growth."
It is important to note that while the company has performed tremendously since its listing, there is a high risk involved in such small-cap firms. These are highly volatile and can fall as fast as they rise, hence risk-averse investors should stay away. One must always contact their financial advisor before investing in them.
Disclaimer: This story is for educational purposes only. Please speak to an investment advisor before making any investment decisions.