Indostar Capital Finance Analysis

dividend

Pros

• Dividends paid are thoroughly covered by earnings (9.3x coverage).
• Dividends after 3 years are expected to be thoroughly covered by earnings (11.5x coverage).

Cons

• IndoStar Capital Finance has only been paying a dividend for 2 years, and since then there has been no growth.
• Whilst dividend payments have been stable, IndoStar Capital Finance has been paying a dividend for less than 10 years.
• IndoStar Capital Finance's pays a lower dividend yield than the bottom 25% of dividend payers in India (0.76%).
• IndoStar Capital Finance's dividend is below the markets top 25% of dividend payers in India (3.08%).

future

Pros

• IndoStar Capital Finance's earnings are expected to grow significantly at over 20% yearly.
• IndoStar Capital Finance's earnings growth is expected to exceed the India market average.
• IndoStar Capital Finance's earnings growth is expected to exceed the low risk savings rate of 7.2%.
• IndoStar Capital Finance's net income is expected to increase by more than 50% in 2 years time.
• An improvement in IndoStar Capital Finance's performance (ROE) is expected over the next 3 years.
• IndoStar Capital Finance's revenue growth is expected to exceed the India market average.

Cons

• IndoStar Capital Finance's earnings are expected to increase but not above the low risk growth rate next year.
• IndoStar Capital Finance is not expected to efficiently use shareholders’ funds in the future (Return on Equity less than 20%).
• Performance (ROE) is not expected to exceed the current IN Consumer Finance industry average.
• IndoStar Capital Finance's revenue is expected to increase but not above the 50% threshold in 2 years time.
• IndoStar Capital Finance's revenue is expected to grow by 14.5% yearly, however this is not considered high growth (20% yearly).

health

Pros

• IndoStar Capital Finance is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
• IndoStar Capital Finance is profitable, therefore cash runway is not a concern.
• IndoStar Capital Finance is profitable, therefore cash runway is not a concern.
• Debt is covered by short term assets, assets are 1.3x debt.
• IndoStar Capital Finance's cash and other short term assets cover its long term commitments.
• Low level of unsold assets.

Cons

• Debt is not well covered by operating cash flow (12.5%, less than 20% of total debt).
• The level of debt compared to net worth has increased over the past 5 years (200.3% vs 245.8% today).
• IndoStar Capital Finance's level of debt (245.8%) compared to net worth is high (greater than 40%).

management

Pros

• The tenure for the IndoStar Capital Finance management team is about average.

Cons

• The average tenure for the IndoStar Capital Finance board of directors is less than 3 years, this suggests a new board.
• Ramachandran's remuneration is higher than average for companies of similar size in India.
• Ramachandran's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.
• IndoStar Capital Finance individual insiders have only sold shares in the past 3 months.

past

Pros

• IndoStar Capital Finance's year on year earnings growth rate has been positive over the past 5 years, however the most recent earnings are below average.

Cons

• IndoStar Capital Finance's 1-year earnings growth is negative, it can't be compared to the 5-year average.
• IndoStar Capital Finance used its assets less efficiently than the IN Consumer Finance industry average last year based on Return on Assets.
• IndoStar Capital Finance has not efficiently used shareholders’ funds last year (Return on Equity less than 20%).
• IndoStar Capital Finance's 1-year earnings growth is negative, it can't be compared to the IN Consumer Finance industry average.

value

Pros

• IndoStar Capital Finance is good value based on expected growth next year.
• 541336 outperformed the Consumer Finance industry which returned -28.8% over the past year.

Cons

• IndoStar Capital Finance's share price is above the future cash flow value, it's not available at a moderate discount (< 20%).
• IndoStar Capital Finance's share price is above the future cash flow value, it's not available at a substantial discount (< 40%).
• IndoStar Capital Finance is overvalued based on assets compared to the IN Consumer Finance industry average.
• IndoStar Capital Finance is overvalued based on earnings compared to the IN Consumer Finance industry average.
• IndoStar Capital Finance is overvalued based on earnings compared to the India market.
• 541336 underperformed the Market in India which returned -14.5% over the past year.
• BSE:541336 is up 2.8% underperforming the Consumer Finance industry which returned 10.3% over the past month.
• BSE:541336 is up 2.8% underperforming the market in India which returned 8% over the past month.