1. ⚡ At a Glance
IndoStar Capital Finance Ltd is a Brookfield-backed NBFC that once had all the makings of a star – marquee promoter, deep capital pool, and diversified lending. But 2020–23 was nothing short of a horror show. After years of cleaning up the loan book, selling off the housing subsidiary, and watching margins bleed, IndoStar is trying to rediscover growth. The question: is the stock at ₹342 a turnaround play or a zombie masquerading as a financial institution?
2. 🎬 Introduction with Hook
Brookfield + NBFC = Magic, right? That was the formula in 2020 when IndoStar got a PE giant as its majority owner. What followed was:
- A corporate loan book clean-up 🧹
- Pandemic-induced pain 💔
- Asset quality issues 🧻
- And now, a confused strategy oscillating between used vehicle finance, SME lending, and “hopes”
The stock has recovered 70%+ from its 52-week low, but does it deserve a PE of 89? Time for an x-ray.
3. 💼 Business Model – WTF Do They Even Do?
IndoStar is a non-deposit-taking NBFC with focus on:
- Vehicle Finance (Used CV loans): ~60% of the book, primarily commercial vehicle lending
- SME Lending: Secured business loans, ~35%
- Retail Housing Finance: Was a focus until they sold IndoStar Home Finance to Witkopeend B.V. in 2025
- Legacy Corporate Loans: A mess that’s mostly wound down
So in short: Old loans cleaned, vehicle loans pushed, and SME loans prayed for.
4. 📈 Financials Overview – Profit, Margins, ROE, Growth
🟢 Some green shoots in FY25, but the trailing numbers are still underwhelming:
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue (₹ Cr) | 1,178 | 1,396 | 1,404 |
| PAT (₹ Cr) | 225 | 116 | 121 |
| ROE | 2% | 1.5% | 1.53% |
| NIMs | ~7% | ~8.5% | Flat |
| AUM | ~₹9,000 Cr | ~₹9,500 Cr | ~₹10,000 Cr |
🔴 5-Year Sales CAGR: -3%
🔴 5-Year Profit CAGR: 17% (misleading due to turnaround base)
5. 💸 Valuation – Is It Cheap, Meh, or Crack?
With a P/E of 89, IndoStar is in startup territory without the startup story.
- P/B Ratio: 1.28 – not cheap for an NBFC with sub-2% ROE
- FV Calculation:
Let’s assume a normalized ROE of 10% in future and 1.2x P/B. plaintextCopyEditBook Value FY25 = ₹267 Normalized EPS = ₹26.7 P/E ~10x fair for such ROE = ₹267 Add turnaround premium (15%) = ₹307
✅ Fair Value Range = ₹270–310
(Current price = ₹342 = stretching optimism)
6. 🍛 What’s Cooking – News, Triggers, Drama
- ✅ Exit from housing biz: Sold IndoStar Home Finance to Netherlands-based firm
- ⚠️ CHRO exit in July 2025: Yet another CXO out the door
- ✅ Brookfield still owns 73.29% – though they’ve been gradually reducing stake
- ❌ Credit rating under review in June 2025 (CRISIL, Brickwork)
- ❓ No strong growth triggers apart from hopes of rerating and AUM expansion
7. 🧾 Balance Sheet – How Much Debt, How Many Dreams?
Solid but not spectacular.
| Metric | Mar 2025 |
|---|---|
| Net Worth | ₹3,635 Cr |
| Total Borrowings | ₹6,916 Cr |
| Debt-to-Equity | ~1.9x |
| CAR | >25% |
Decent capital buffer, but the size of AUM is stagnating.
8. 💵 Cash Flow – Sab Number Game Hai
- FY25 CFO: ₹-1,061 Cr
- CFI: ₹-305 Cr
- CFF: ₹1,070 Cr
🚨 Cash flow from ops is consistently negative — risky for a lender. Most liquidity comes from refinancing, not operations.
9. 📊 Ratios – Sexy or Stressy?
Here’s the pulse:
| Ratio | Value | Verdict |
|---|---|---|
| ROA | 0.43% | ⚰️ Weak |
| ROE | 1.53% | 🙈 Embarrassing |
| ROCE | 7.43% | Below-par |
| NIM | ~8.5% | 👍 Acceptable |
| Cost-to-Income | ~42% | ✅ Efficient |
| GNPA | ~4.2% | 🔴 Slightly high |
So basically: low profitability + decent operating structure + weak return metrics = meh-tier NBFC
10. 🧮 P&L Breakdown – Show Me the Money
- Revenue: ₹1,404 Cr
- Operating Profit: ₹819 Cr (OPM 58%)
- Net Profit: ₹121 Cr
- Interest Cost: ₹741 Cr
- EPS: ₹8.86
The profit is barely a margin trickle after interest expense and provisions.
11. ⚔️ Peer Comparison – Who Else in the Game?
| Company | ROE | P/E | AUM | Verdict |
|---|---|---|---|---|
| Bajaj Finance | 19.2% | 34x | ₹2.5L Cr+ | Dreamboat 💎 |
| Chola Invest | 19.7% | 30x | ₹1.2L Cr+ | Solid Player ✅ |
| Muthoot Finance | 19.5% | 20x | ₹70K Cr | Niche King 🪙 |
| L&T Finance | 10.8% | 19x | ₹90K Cr | Rebuilding 🔧 |
| IndoStar | 1.5% | 89x | ₹10K Cr | 🙈 Bruh… |
The gap is… embarrassing.
12. 🧬 Miscellaneous – Shareholding, Promoters
- Promoter: Brookfield (73.29%)
- Public Shareholding: 21.74%
- FII + DII: Barely 5% combined – no confidence from institutions
- CXO churn: High
- Employee count: ~1,300+
- No dividend in 5 years – all profit gets recycled into recovery mode
13. 🧑⚖️ EduInvesting Verdict™
IndoStar is like a failed MBA startup with Brookfield as its angel investor. The loan book is stable, the worst seems priced in, but at ₹342, the valuation defies logic unless FY26 becomes a breakout year (AUM > ₹12K Cr, ROE > 10%).
🔍 For now:
“P/E 89 for 1.5% ROE? Even Dogecoin had better risk-reward.”
✅ Monitor if you believe in deep value + Brookfield magic
❌ Avoid if you want actual earnings or real growth
✍️ Written by Prashant | 📅 July 6, 2025
Tags: IndoStar Capital, NBFC, Brookfield, Financials, Valuation, Turnaround, AUM Growth, Used Vehicle Loans, Fair Value, EduInvesting
