This stock hits all-time high on robust Q1; more than doubles in 11 months

Shares of Star Housing Finance rallied more than 12% in early trade to hit a fresh life-time high on Tuesday after the rural-focused housing finance company reported strong earnings for the first quarter ended June 2022. The microcap stock has delivered more than 120% returns to its shareholders in the past 11 months, with the stock price rising from its 52-week low of ₹71.20 on 28 August 2021, to attain an all-time high of ₹159.3 in intraday today on the Bombay Stock Exchange (BSE).

On Tuesday, Star Housing Finance share price opened higher at ₹155, up 9.1% against the previous closing price of ₹142.05 as investors cheered its June quarter earnings. In the first hour of trade so far, the housing finance stock rose as much as 12.14% to attain a fresh high of ₹159.3 on the back of the strong volume. On the volume front, 1.06 lakh shares changed hands over the counter on the BSE as compared to the two-week average volume of 1.13 lakh scrips, while market capitalisation climbing to nearly ₹257 crore.

Star Housing Finance shares have been rising for the past seven sessions and rose 18.5% during this period. The stock trades in a bullish range, higher than its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages. It has gained 14% in a week, 13% in the past one month, and 78% since the beginning of the calendar year. The stock has given 58% returns to its shareholders in one year, while it has surged 240% in the last three years.

Strong Q1 fuelled rally

Star Housing Finance, which has been rising for the last seven sessions, gained momentum after the company announced its earnings report for the April-June quarter of 2022. The net profit of the company jumped multi-fold to ₹1.36 crore in the quarter ended June 30, 2022, as against ₹0.24 crore in the same period last year. Sales rose 16.05% to ₹4.99 crore in Q1FY23, compared with ₹4.30 crore the corresponding period last fiscal.

During the quarter under review, the company achieved the highest-ever quarterly disbursement of ₹22.56 crore, supported by expansion across operational geographies in the form of physical offices. The assets under management (AUM) stands at ₹116.32 crore with an annualised growth of 23% in Q1FY23, driven by co-lending tie-ups with Capital India Home Loans and Singularity Credit Pvt Ltd. Going forward, the housing finance firm aims to grow the assets under management (AUM) with a CAGR of 100% and a significant increase in the market cap of the company.

Speaking on the performance of the company, Ashish Jain, MD of Star HFL said, “Star HFL is now set to grow. This is validated by our business performance in Q1FY23 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, both debt and equity. We are continuing to invest in creating capacity including location expansion, manpower on-boarding and digitisation. We look forward to build-up and sustain the momentum of Q1 into the remaining quarters. We see our capacity getting utilised to the fullest through FY23.”

Jain further stated that the company will invest in technology to develop one-click digital lending capabilities. The firm will continue to strengthen the funding machinery through debt and equity and make the company ready for institutional equity from domestic or international markets, he added.