IndoStar Capital Finance Limited

Financial Services — Credit Services · NSE

₹197.00+₹1.72 (+0.88%)

DalalBaazaar Score

48 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Very High

Driven by short-term liabilities exceed short-term assets, negative free cash flow, the company is currently loss-making.

In simple words: The company is currently losing money, though profits are falling even as sales grow. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:01 pm

Understanding the Business

Company site ↗

The 60-second version of IndoStar Capital Finance Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

IndoStar Capital Finance Limited, a non-banking financial company, provides various financing services in India.

IndustryCredit Services

SectorFinancial Services

Employees4,585

Annual revenue₹1,309 Cr

How does it make money?

Turns over ₹1,309 Cr a year. Of every ₹100 of sales, about ₹11 reaches shareholders as profit, with ₹-18 left at the operating level before interest, tax and depreciation. Each of its 4,585 employees supports ₹28.5 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹28.5 lakh

Who are its competitors?

The closest listed comparisons in its industry are BAJAJ FINANCE LIMITED, STATE BANK OF INDIA, HDFC BANK LTD, ICICI BANK LTD.. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Not assessable from these ratios

For a lender, returns on capital are shaped by leverage and funding cost rather than by pricing power, so the usual financial signature of an advantage does not apply. Judge this one on deposit franchise, cost of funds and asset quality — none of which are in this data.

Peer median ROE16.5%

What is the outlook?

3 analysts covering the stock expect revenue to grow about 26.8% and earnings to grow about 111.5% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+26.8%

Est. earnings growth+111.5%

Analysts3

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +21% while net margin moved -48% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+21%

Margin effect-48%

DalalBaazaar Score

48/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue CAGR of only 6.4% — barely ahead of inflation
✗ Profit has declined at 14.6% a year
✗ Profit is compounding slower than revenue — margins are being squeezed as the business grows
✗ Profit fell 98.2% in the latest year

Quality vs. Valuation

Company Quality

48/ 100

Average

How good the business is, ignoring the share price entirely.

Valuation

36/ 100

Expensive

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

vs. its own history

Not enough price and earnings history

vs. sector peers

Not enough peers with a usable P/E

vs. generic bands

N/A

No P/E — the company is lossmaking

EV/EBITDA

—

PEG

—

What's Good / What's Bad

🟢 What's Going Well2

Return on capital is rising
ROCE has improved from 4.6% to 10.2%.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 7.2% to 3.7% — each rupee of shareholder capital earns less than it did.
Short-term liquidity is tight
Current ratio of 0.92 — near-term obligations exceed near-term assets.

Red Flags

3 items require attention · 2 high · 1 watch

🔴Thin interest coverageFinancial
Operating profit covers interest only 2.0x — little room if earnings dip.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 89.8 points, from 71.4% to -18.4%.
🟡Profit is decliningFinancial
Net profit is down 38% over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 71.4% to -18.4%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Growth barely outpaces inflation
Revenue compounding at 6.4% a year is close to the rate prices rise, so the business is gaining little ground in real terms. That leaves the share price dependent on a re-rating rather than on earnings growth.
Returns on shareholder capital are falling
ROE has dropped from 7.2% to 3.7%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.
Size brings its own risk
Micro Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.
Several serious flags at once
2 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above -20%✓ -18.4%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Return on equity stays above 8%✗ 3.7%
For a lender this is the cleanest single read on whether the book is being grown profitably.
3Interest cover stays above 3x✗ 2.0x
How much operating profit can fall before interest stops being comfortably covered.
4Revenue growth stays above 5% a year✓ 6.4% CAGR
Latest reported year was 2.8%. The bar is set below the established compounding rate, so ordinary variation does not trip it.

Investment Checklist

4 / 12 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✗ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✗ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

1 good · 5 neutral · 5 weak

Market Cap

₹3,185 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

Not meaningful

Loss-making

Earnings are negative, so a P/E multiple can't be read here

P/B Ratio

0.84x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹-24.21

Loss-making

Negative earnings per share — the business is losing money

ROE

3.7%

Weak

Weak capital efficiency

ROCE

10.2%

Moderate

Moderate return on the capital in the business

Debt/Equity

1.45x

Moderate

Moderate leverage

Revenue Growth (YoY)

2.8%

Modest

Modest growth

Profit Growth (YoY)

-98.2%

Falling

Profits are shrinking

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

-₹1,003 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

P/E (Forward)

12.4x

Operating Margin

6.3%

Average

Average margins

Net Margin

0.0%

Weak

Very little revenue reaches the bottom line

Current Ratio

0.92

Adequate

Adequate, but no real cushion

Beta (vs Nifty)

0.46

Defensive

Steadier than the market

52W Range Position

16%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

209.3 / 232.6

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

29.0

Oversold zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹1,086 Cr	₹926 Cr	₹1,272 Cr	₹1,309 Cr	+6.4%
EBITDA	₹775 Cr	₹408 Cr	₹581 Cr	-₹241 Cr	—
EBITDA Margin	71.4%	44.1%	45.7%	-18.4%	—
PAT (Net Profit)	₹225 Cr	₹116 Cr	₹121 Cr	₹140 Cr	-14.6%
EPS	₹16.55	₹8.51	₹8.57	₹9.72	-16.3%
ROE	7.2%	3.6%	3.3%	3.7%	—
ROCE	4.6%	4.2%	6.3%	10.2%	—
Total Debt	₹5,648 Cr	₹7,572 Cr	₹6,916 Cr	₹5,477 Cr	-1.0%
Free Cash Flow	₹873 Cr	-₹1,728 Cr	-₹1,085 Cr	-₹1,003 Cr	—

🟢 Revenue has grown at 6.4% a year over 3 years.

🔴 EBITDA has turned negative, from ₹775 Cr to -₹241 Cr.

🔴 EBITDA Margin has fallen from 71.4% to -18.4% over 3 years (-89.8 pts).

🔴 PAT (Net Profit) has shrunk at 14.6% a year over 3 years.

🔴 EPS has shrunk at 16.3% a year over 3 years.

🔴 ROE has fallen from 7.2% to 3.7% over 3 years (-3.5 pts).

🟢 ROCE has risen from 4.6% to 10.2% over 3 years (+5.6 pts).

🟡 Total Debt has been broadly flat over 3 years (-1.0% a year).

🔴 Free Cash Flow has turned negative, from ₹873 Cr to -₹1,003 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹9,517 Cr

Total Liabilities

₹5,734 Cr

Cash & Equivalents

₹36 Cr

Operating Cash Flow

-₹989 Cr

Capex

-₹14 Cr

Shareholding (proxy)

Institutional Holding

1.2%

Insider Holding

82.4%

Corporate Actions

Ex-Dividend Date

19 Nov 2019

Analyst Consensus

Recommendations

3 Buy · 0 Hold · 0 Sell

Target Price (Mean)

₹318.33

+61.6% vs CMP

Target Range

₹310 – ₹335

Peer Comparison

Company	P/E	ROE
BAJAJ FINANCE LIMITED	30.2x	17.8%
STATE BANK OF INDIA	10.3x	15.2%
HDFC BANK LTD	15.9x	13.8%
ICICI BANK LTD.	18.1x	16.5%

Recent News

6 general

Indostar Capital Finance Share Price: 7 Stock Signals to Watch Now

Univest, 05 Oct

IndoStar Capital Finance (NSEI:INDOSTAR) Stock Price

Simply Wall Street, 02 Aug

Buy Indostar Capital Finance; target of Rs 310: Motilal Oswal

Moneycontrol.com, 31 Jul

Buy, Sell or Hold: JM Financial initiates coverage on IndoStar Capital Finance; Emkay maintains Accumulate

The Economic Times, 13 Jul

IndoStar Capital Finance allots NCDs worth ₹400 crore on private placement

scanx.trade, 23 Jul

Indostar Capital Finance Ltd. Share Price Live Today

CNBC TV18, 03 Jan

Watch Items

This is a financial-sector business: borrowing is its raw material, not leverage in the usual sense. Debt/Equity and ROCE here aren't comparable to a manufacturer's — read them alongside NIM, GNPA and capital adequacy from the company's own disclosures.
Cross-check against the company's latest quarterly filing / investor presentation before acting.
RSI is in oversold territory — could mean either a bargain or a stock still falling for good reason. Check the 'why' before assuming reversal.

DalalBaazaar Thesis

StrongFinancial Health

MiddlingValuation · Risk

WeakBusiness Quality · Growth · Profitability

Points for each in the Score ↑

Unremarkable in both directions

A reasonable business at a reasonable price. Nothing here is alarming and nothing is compelling, which usually means the decision rests on things this data cannot see — the industry's direction, management's intent, and what else is available to you. 2 high-severity red flags sit above this conclusion and should be read first.

2 of 4 tripwires tripped — Return on equity stays above 8%; Interest cover stays above 3x · see Key things to watch ↑