Indostar reports healthy liquidity, stock gains

Mumbai based financial institution, Indostar Capital, in its stock filing on friday ran a disclosure about its liquidity position. It has reported healthy liquidity position, an encouraging sign for the lenders.

The NBFC sector has faced long stretched liquidity crunch in FY19 and H1FY20. Many financial institutions have felt the heat of negative sentiment and harsh regulatory guidelines. The disbursements declined sharply in fourth quarter of FY19 and followed the same trend in Q1FY20.

The strong liquidity position disclosure from Indostar Capital gives it the much needed boost. As of end of FY19, the networth of the company stood at Rs. 3,006 crore. The gearing has increased to 3.6x in FY19 from 2.9x of earlier fiscal.

At the end of H1FY20, Indostar reported positive ALM, on month on month basis, for next 18 months. The asset liability management (ALM) system is drafted by RBI with aim to control miss match and interest rate related risks. It also informed that it raised Rs. 936.1 crore in Q2FY20. The lender can ride on low leverage with 2.4x debt to equity status and capital adequacy of 25 per cent, much than regulatory requirement. It was also able to reduce its corporate exposure to 34 per cent at the end of the quarter from 40 per cent two quarters earlier.

Reacting to liquidity update on Friday, stock clocked 8 per cent intra-day gains to touch Rs. 199.80. At 1.00 pm, stock traded with gains of more than 2 per cent at Rs. 189 in BSE.