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Disbursements weak in vehicle finance; credit costs stable QoQ.

PAT grew ~3% YoY; asset quality improved, supported by the ARC transaction.

* IndoStar’s 4QFY25 PAT at INR362m increased ~3% YoY (PY: INR353m). FY25 PAT grew ~4% YoY to INR1.2b. Credit costs were broadly stable QoQ at ~INR494m (PQ: ~INR479m), translating into annualized credit costs of 1.8%.

* On 29th Mar’25, IndoStar sold a pool of assets from its Commercial Vehicle business—comprising outstanding dues of INR906m—to Assets Care & Reconstruction Enterprise Ltd.

Niwas Housing Finance (earlier IndoStar Home Finance)

* As of Mar’25, AUM stood at ~INR30.1b, growing 36% YoY and ~12% QoQ.

* GS3 improved ~30bp QoQ to 1.35%, while NS3 declined ~40bp QoQ to 0.9%.

* Niwas Housing Finance delivered a PAT of INR240m in 4QFY25 (vs. INR160m in 3QFY25).

* CRAR stood at ~49.8% and the debt-equity ratio stood at 3.4x.

IndoStar Capital Finance Limited (ICFL)

* ICFL delivered a PAT of INR120m in 4QFY25, marking a decline of ~36% QoQ.

* Standalone total AUM stood at ~INR79.6b and grew ~23% YoY. Of this, retail vehicle finance AUM stood at ~INR74b, which grew ~32% YoY.

* VF disbursements in 4QFY25 stood at ~INR10.5b, which declined ~24% YoY.

* GS3 improved ~40bp to ~4.5%, whereas NS3 declined ~20bp QoQ to 2.45%.

* CRAR was healthy at ~28.5% and the debt-equity ratio stood at 2x.

Valuation and view

* IndoStar has a strong focus on expanding its retail business, specifically in the Commercial Vehicle (CV) lending segment. The company plans to target the lucrative used CV market, with an increasing emphasis on light commercial vehicles in tier II and III towns.

* IndoStar aims to boost its disbursement capabilities by expanding its distribution presence. It trades at 1.1x FY27E P/BV and is transitioning into a significant used-CV and MSME lender. We might make changes to our estimates after the earnings call on 30th Apr’25.

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