TruCap Finance Hits 5% Upper Circuit After Gold Loan Business Sale to Incred Finance for ₹330 Crore
Stock Surges as Investors Cheer Business Restructuring
TruCap Finance Hits : Shares of TruCap Finance Limited hit a 5% upper circuit in today’s trading session after the company announced the slump sale of its entire gold loan business to Incred Finance for ₹330 crore. The stock opened at ₹11.16, jumping from its previous closing price of ₹10.63, as investors responded positively to the strategic move.
TruCap Finance’s Strategic Exit from the Gold Loan Business
TruCap Finance Limited, a Non-Banking Financial Company (NBFC), has signed a binding term sheet with Incred Finance to divest its gold loan business, including its assets and liabilities. This strategic decision marks a significant shift for TruCap Finance, as the company will exit the gold loan segment entirely post-transaction.
The total consideration for the sale is approximately ₹330 crore, and the deal is expected to be completed by April 30, 2025.
Financial Impact of the Gold Loan Business Sale
The gold loan business contributed significantly to TruCap Finance’s financial performance in FY24, with:
- Revenue: ₹66.40 crore
- Net Worth: ₹106.29 crore
- Assets Under Management (AUM): ₹289.82 crore
By offloading this segment, the company is restructuring its business model, possibly focusing more on MSME lending.
Stock Market Reaction & Share Price Movement
Following the announcement, TruCap Finance’s stock price surged 5% and hit the upper circuit, reflecting investor confidence in the company’s strategic restructuring. The stock currently holds a market capitalization of ₹131 crore.
Key Stock Market Metrics
| Market Cap | ₹131 Cr. |
|---|---|
| Current Price | ₹11.2 |
| 52-Week High/Low | ₹74.1 / ₹10.1 |
| Stock P/E | 13.5 |
| Book Value | ₹19.8 |
| Dividend Yield | 0.09% |
Financial Performance: Revenue & Profit Trends
TruCap Finance has experienced mixed financial results in recent quarters.
- Revenue Growth (YoY): Up 29.50%, from ₹39.82 crore in Q3FY24 to ₹51.57 crore in Q3FY25.
- Revenue Growth (QoQ): Declined 10.54%, from ₹57.65 crore in the previous quarter.
- Net Profit (YoY): Fell 66.31%, from ₹2.85 crore to ₹0.96 crore.
- Net Profit (QoQ): Decreased 4.95%, from ₹1.01 crore in the previous quarter.
Despite a strong YoY revenue growth, the declining profitability could indicate higher operating costs or increased loan defaults.
Key Financial Ratios
| Metric | Value |
|---|---|
| ROCE (Return on Capital Employed) | 11.6% |
| ROE (Return on Equity) | 5.30% |
| Debt-to-Equity Ratio | 3.20 |
| Price-to-Earnings Ratio (P/E) | 13.5 |
| Promoter Holding | 37.2% |
| EPS (Earnings Per Share) | ₹0.83 |
| Pledged Shares | 0.00% |
| Industry P/E | 20.1 |
| Intrinsic Value | ₹31.2 |
| RSI (Relative Strength Index) | 33.7 |
About TruCap Finance Limited
Formerly known as Dhanvarsha Finvest Limited, TruCap Finance is an RBI-registered Non-Banking Financial Company (NBFC). The company primarily provides credit solutions to Micro, Small, and Medium Enterprises (MSMEs) in India.
Business Focus
- Offers business loans ranging from ₹1 lakh to ₹20 lakh
- Secured gold loans up to ₹50 lakh (now discontinued)
Following the gold loan business exit, TruCap Finance is likely to double down on its MSME lending operations, where it has a strong presence.
Why Did TruCap Finance Sell Its Gold Loan Business?
The decision to offload the gold loan business could be influenced by multiple strategic factors:
- Debt Reduction: The company has a high debt-to-equity ratio of 3.20, and selling assets could improve its balance sheet.
- Focus on Core Business: By exiting gold loans, TruCap Finance can streamline its business model and concentrate on MSME financing.
- Liquidity & Expansion Plans: The ₹330 crore inflow from the sale could be used for expansion, digital transformation, or operational improvements.
Investor Outlook: What’s Next for TruCap Finance?
With the gold loan exit, TruCap Finance may reposition itself in the NBFC sector, focusing solely on business and MSME loans. However, investors should consider:
- Profitability Concerns: A declining QoQ net profit trend raises concerns about operational efficiency.
- Debt Management: The company’s debt-to-equity ratio of 3.20 suggests a high leverage risk.
- Growth Potential: If the capital from the sale is effectively reinvested, TruCap Finance could witness higher growth in its MSME segment.
Final Thoughts
TruCap Finance’s strategic gold loan business sale has boosted investor confidence, as seen in the stock’s 5% upper circuit movement. The sale brings in ₹330 crore, which could be a turning point for the company’s future.
However, long-term investors should closely monitor the company’s financials, debt levels, and growth strategies to assess its sustainability in the evolving NBFC space.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.