Five Star Business Finance IPO: GMP, subscription status on day 2. Buy or not?

Five Star Business Finance IPO: The initial public offer (IPO) opened for subscription on 9th November 2022 and the public issue worth 1,960.01 crore received tepid response from investors. As per the Five Star Business Finance IPO subscription status, after day one of bidding, the public offer has been subscribed 0.02 times whereas its retail portion has been subscribed 0.03 times.

Five Star Business Finance IPO GMP today

According to market observers, Five Star Business Finance IPO grey market premium (GMP) today is 13, which is 3 higher from its Wednesday close of 10 per equity share. They said that public offer of the NBFC has received tepid response from investors and this could be the possible reason for grey market behaving dull on the public issue. However, they said that banking and financial segment is highly bullish these days and one can expect buying interest among big ticket investors as the issue is slightly highly priced.

What this GMP means?

Market observers went on to add that Five Star Business Finance IPO GMP today is 13, which means the public offer is being expected by the grey market to list around 487 ( 474 + 13), which is at par with the price band of 450 to 474 per equity share. They went on to add that grey market is signaling ‘par listing’ of the public issue.

Five Star Business Finance IPO: Buy or not?

On review of Five Star Business Finance IPO, Abhay Doshi, Founder at said, “Five Star Business Finance is a prominent NBFC based in southern India that enjoys unicorn status with the presence of marquee investors. Five Star provides secured business loans, and 95 per cent of their loan disbursements are for loans between 1 and 10 lacs. The company had performed significantly well. NIMS for FY22 were 17.68%, while GNPA and NNPA remained very controlled. On the valuation front, the issue looks attractively priced based on the price at the upper band the asking P/BV is 3.58x (based on June, 22 book value).”

Giving ‘subscribe’ tag to the public issue, Astha Jain, Senior Research Analyst at Hem Securities said, “Company is bringing the issue at price band of 450-474 per share at p/b multiple of 3.84x on FY22 basis. Company having the fastest Gross Term Loans growth among peers has strong return and growth metrics and a significant potential addressable market. Also, company is among the select institutions to develop an underwriting model that evaluates the cash-flows of small business owners and self-employed individuals in the absence of traditional documentary proofs of income has strong on-ground collections infrastructure leading to its ability to maintain a robust asset quality. Company has access to diversified and cost-effective long-term financing with a conservative approach to asset liability and liquidity management and experienced, cycle-tested leadership with an experienced longstanding promoter, and a professional management team and supported by marquee investors. Hence looking after all above, we recommend “Subscribe” on issue.”

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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