Srestha Finvest Announces Strong Q2 Results, FIIs Buy Stake; BUY/SELL/HOLD?

On Tuesday, shares of NBFC company Srestha Finvest Ltd jumped around 4 per cent to an intraday high of Rs 0.81 per share from its previous closing of Rs 0.78 per share. The stock's 52-week high is Rs 1.28 and its 52-week low is Rs 0.49. The company has a market cap of over Rs 132 crore.

The financial results for the quarter that concluded on September 30, 2024, have been released by Srestha Finvest, a small-cap company in the NBFC industry. In Q2FY25, the firm generated revenue from operations of Rs 3.57 Cr, up from Rs 2.10 Cr in Q2FY24. During the under-consideration quarter, the company's expenses were Rs 19.37 Cr, compared to Rs 5.40 Cr during the same period last year. The net loss for Srestha Finvest climbed to Rs 14.81 Cr from Rs 3.29 Cr in the same quarter of the prior fiscal year.

MarketsMOJO has revised its rating of microcap financing company Srestha Finvest to 'Hold'. The excellent valuation of the firm, which has a price to book value of 0.8 and a ROE of 23.9 according to MarketsMOJO, is one of the main reasons for the 'Hold' rating.

The firm also confirmed the structure of its QIP and expressed its goal to generate as much as 100 crores. The said share issuance will consist of twenty crore equity shares of one rupee each and is subject to approval from the shareholders and the relevant authorities. The company will, therefore, issue 93 million equity shares at a price of 1.05 Rs per share (Rs 0.05 being the premium) to 20 shareholders who are not company insiders. Further, the Board of Directors of the Company has also sanctioned an increase in the borrowing limit of the Company up to Rs 500 crores subject of course to the provisions of Section 180(1) c of the Companies Act, 2013 which would be subject to shareholders approval.

The company performed a 2:1 stock split on 22nd September 2024 in which two shares of Rs 1 each were issued for one share of Rs 2 face value. This stock split is executed to improve liquidity and make it possible for a greater number of investors to acquire shares at lower rates.

There was a great accomplishment in the company's financial standing in Q1FY25 as there was a growth in revenue by 1,634% to Rs 3950 lakh from Rs 227.80 lakh in Q1 FY24. There was also a significant boost in net profit as it increased from Rs 43.90 after a year it reached a whopping Rs 3100.62 lakh which is a 6,963% year-on-year boost thanks to initiatives and demand from the market.

For FY24, the total income for Srestha Finvest increased by 269% reaching a total income of Rs 1,013.01 lakh as opposed to Rs 274.56 a year before. For the FY24 period, the company registered a net profit of upto Rs 173.86 lakhs, an improvement over the net loss recorded amounts of Rs 497.41 lakhs in FY23. This marks the company's first year of profit in six years with net losses on the books for five consecutive years and shows a change in financial momentum for the better.

Srestha Finvest Ltd. which is a company that has been in business since 1985 has been known as a well-rounded provider of financial services like loans, provision of finance and offering investment opportunities. The company, which belongs to Category B Non-Systematically Important Non-Deposit Taking N.B.F.C (Investment and Credit Company), provides and deals in asset-based loans secured by securities, hire purchase and leasing facilities, and share and investment business in addition to its mortgage business. Srestha Finvest Limited is an active market player as part of India's financial services with the current market capitalization surpassing Rs 100 crore.

The QIP investment and additional borrowings are consistent with the Company's objective of building its market presence and achieving its financial objectives.