IndoStar Capital Finance Limited sells Large Corporate Portfolio to Phoenix ARC Limited

The Board of IndoStar Finance Capital Limited (ICFL), a systemically important nonbanking finance Company "NBFC", registered with the Reserve Bank of India, took a decisive step forward in its stated retailization strategy by selling a significant portion of its legacy corporate loan book to Phoenix ARC. The sale consists of certain accounts that were tagged in Stage 2, aggregating to dues outstanding of Rs 915 crs. The accounts have been resolved on 25th August 2023 at carrying value through an ARC sale under the Swiss Challenge method in terms of Master Directions - Reserve Bank of India (Transfer of Loan Exposures) Directions 2021, as amended.

Under the agreement, Phoenix ARC will set-up a trust that will monitor the progress of the real-estate projects and will also consider funding certain amounts towards financing the completion of these projects. This arrangement will also enable IndoStar's management team to further increase their focus on building its core retail lending business.

Post the transaction, the share of the retail lending book in the company's assets under management has increased from 85% to about 95%. Given the company's focus on used vehicle financing over the last year, the CV disbursal yields have been above 18%, incrementally increasing the yield of the overall portfolio. The focus on used commercial vehicles has also led to lower average ticket sizes of loans, which stood at Rs. 7.6 Lakhs for Q1 FY'24. The company reported a Debt-to-Equity ratio of 1.9x and a strong capital adequacy ratio (CAR) of 34.4% on a standalone basis for the quarter ending June 2023, which together with sufficient liquidity positions the company for future growth.

Shares of IndoStar Capital Finance Limited was last trading in BSE at Rs. 175.90 as compared to the previous close of Rs. 174.65. The total number of shares traded during the day was 11815 in over 154 trades.

The stock hit an intraday high of Rs. 177.00 and intraday low of 167.40. The net turnover during the day was Rs. 2028094.00.

Source : Equity Bulls

Keywords

IndoStarCapitalFinance INE896L01010 CorporatePorftolio Sale PhoenixARC