Illustration by Binay Sinha
Shares of Authum Investment and Infrastructure (Authum) hit a record high of Rs 1,724, surging 5 per cent on the BSE in Friday’s intra-day trade.
The stock of non-banking finance company (NBFC) is trading higher for the fourth straight day, rallying 24 per cent during this period. Meanwhile, since August 5, in 13 trading days, it soared 73 per cent from level of Rs 992.40. The board of directors of Authum at its meeting held on August 07, 2024 had decided not to go ahead with raising of funds by way of qualified institutional placement (QIP), and preferential allotment, etc. at present. Further, the Board shall raise funds as and when required, the company said.
In past one year, the stock price of Authum has outperformed the maket by zooming 258 per cent, as compared to 24 per cent rise in the BSE Sensex. In past 15 months, it skyrocketed 700 per cent from level of Rs 215.35.
Authum is a registered NBFC carrying on the business of investment in shares and securities and also financing activities. The company invested in publicly listed and unlisted companies (providing growth capital), private equity investments, real estate investments and debt instruments. The company also engaged in structured financing, fixed returns portfolio, secured lending and equity investments in emerging companies.
In fiscal 2023, the company acquired Reliance Commercial Finance Ltd (RCFL) and assets of Reliance Housing Finance Ltd (RHFL), after receiving the letters of intent (LOI) dated June 19, 2021, and July 15, 2021, under the intercreditor agreement (ICA) between lenders of RCFL and RHFL.
This scheme of arrangement came into effect on October 14, 2022, following resolution of liabilities on the books of RCFL. Consequently, RCFL became a wholly owned subsidiary of Authum with effect from October 14, 2022, and financial assets of RHFL were acquired by the company on March 29, 2023.
Eventually, on May 10, 2024, National Company Law Tribunal (NCLT) approved demerger of the lending business of RCFL from it and absorption of the same in Authum while RCFL remains a wholly owned subsidiary of Authum with only the residual non-financial business housed in it.
Going forward, Authum plans to venture into adjacent credit capability segments such as structured lending, asset management, asset reconstruction and advisory. While the company has experience in treasury operations, its ability to profitably scale the non-investment businesses, particularly the lending book, remains a key monitorable, Crisil Rating said.
Authum had a sizable investment portfolio of Rs 8,940 crore (at market value) as on March 31, 2024, which marks a three-year compound annual growth rate (CAGR) of 83 per cent. In the past three years, Authum has realised gains of Rs 3,171 crore from its treasury portfolio, which has been the main contributor to net profit, the rating agency said.
Around 91 per cent of Authum’s investments are parked in equities as on March 31, 2024. The investment business will remain sizeable and core to Authum’s strategy going ahead. Equity markets, by their very nature are cyclical. And hence, performance of the investment portfolio remains susceptible to volatility inherent in the capital markets. Adverse movements in the equity market can, therefore, substantially reduce the value of the company’s investment portfolio, and hence, remain a key monitorable, it added.
First Published: Aug 23 2024 | 1:44 PM IST
