Mumbai: Non banking financial company (NBFC) IndoStar Capital Finance Ltd made a tepid debut on BSE Monday, with its share price rising just 5% from its IPO price of Rs572 apiece to Rs600.

At 10.19am, IndoStar shares were trading at at Rs585.90 apiece, 2.43% higher against its issue price, on BSE while India’s benchmark Sensex fell 0.06% to 34823.73 points.

The Rs1,844 crore IndoStar IPO was subscribed 6.74 times during the 9-11 May share sale with price band set at Rs570-572 per share. The company had said it would utilize the proceeds from the IPO towards augmenting its capital base to meet future capital requirements.

Promoted by Everstone Capital among other investors, IndoStar Capital Finance is a Mumbai-based , non-deposit taking NBFC. It is primarily engaged in providing structured term financing solutions to corporates and loans to small and medium enterprise (SME) borrowers in India and recently expanded its portfolio to offer vehicle finance and housing finance products. It operates four principal lines of business, namely corporate lending, SME lending, vehicle financing and housing financing.

IndoStar had reported compound annual growth rate (CAGR) of 23% net profit for the four years ended FY17. Between fiscal 2013 and 2017, its total credit exposure and total revenue grew at a CAGR of 30.0% and 31.4%, respectively. Over the same period, it also experienced high growth in disbursements.

Ahead of the IndoStar IPO, brokerage Angel Broking had said that at the upper end of the price band, IndoStar Capital Finance is valued at 2.2 times of its Q3FY18 book value, and on post-dilution basis, 1.9 times of book value. “The strong sponsorship of Everstone and other shareholders, along with a well capitalized balance sheet and an experience and focused management, provide an excellent base for the next level of growth," it said in a note on 7 May.

IndoStar is affected by volatility in interest rates for both lending and treasury operations, which could cause net interest income to vary and consequently affect profitability which is a concern, said HDFC Securities Ltd in a 7 May note.

“It expanded into new lines of business and if it is unable to successfully run the new businesses profitably, its results of operations and financial condition may be affected," it said in the note.

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