Finance company Five-Star Business Finance announced Q1FY26 results Assets Under Management (AUM) stood at Rs 12,458 crore, registering a 20% year-on-year growth Disbursements were Rs 1,290 crore, down 2% YoY Gross Stage 3 Assets rose to 2.46% from 1.41% in Q1FY25 Net Stage 3 Assets increased to 1.25% from 0.68% YoY Profit After Tax (PAT) stood at Rs 266 crore, up 6% YoY Net Interest Margin came in at 16.43%, slightly down by 29 bps YoY Return on Assets declined to 7.24% from 8.23% in Q1FY25 Return on Equity stood at 16.57%, down from 18.95% YoY Commenting on the results, Lakshmipathy Deenadayalan, Chairman & Managing Director, said, "The effect of overleverage crisis on secured portfolio that we witnessed during the last quarter continued during 1QFY26 as well, at slightly heightened intensity, leading to impact on asset quality metrices of Five Star. As a Company focused on “Quality Growth”, our efforts were skewed more towards addressing the asset quality, leading to slightly muted growth on a y-o-y basis. We have consistently maintained very strong asset quality over the last many years; compared against this backdrop, there was an uptick in our DPD and NPA numbers during the quarter. However, viewed in isolation, our NPA numbers shall stack up better than many of our peers operating in the small ticket secured / unsecured loans space. We also believe that a trend reversal is likely on the horizon and is expected to play out over the next couple of quarters, with likely normalization by 2HFY26. We continue to invest in physical infrastructure which forms the foundation on which the business and collections functions are anchored. We added 19 branches during Q1FY2026 leading to a strongbranch network of 767 branches across 10 states and 1 union territory. During this quarter, we disbursed Rs 1,290 crore of loans as against Rs 1,460 crore in Q4FY2025, clearly reflecting a philosophy of cautious but quality growth. On the collections and asset quality fronts, the numbers were muted for the quarter, as can be seen from the table above. We are taking all measures to ensure quick turnaround and bring back our asset quality to be one of the best in the industry. During the quarter, we availed incremental debt of Rs 450 Cr and the cost of incremental debt came in at 8.59%, which is significantly lower by 70 bps than the cost of incremental debt borrowed during the previous quarter. Cost of funds on the book has almost dropped by about 10 bps, and given our cost of incremental debt, we are confident of bringing this to much lower levels in the quarters to come. We continue to have a robust liquidity on the balance sheet of Rs 2,065 Cr. For the quarter, we achieved a PAT of 266 crore, 6% higher as compared to the PAT for Q1FY25. The normalisation in our credit cost in the quarters to come shall have a positive impact on our profitability." Result PDF