Conference Call with Five-Star Business Finance Management and Analysts on Q2FY26 Performance and Outlook. Listen to the full earnings transcript.
Finance company Five-Star Business Finance announced Q2FY26 results Total income of Rs 807 crore; YoY growth of 14%. PBT of Rs 382 crore; YoY growth of 7%. PAT of Rs 286 crore; YoY growth of 7%. ROA at 7.49%; QoQ increase of 25 bps and YoY decrease of 87 bps. ROE at 16.91%; QoQ increase of 34 bps and YoY decrease of 211 bps. Distribution: The Company has increased its branch presence to 800 branches across 11 states / UT. During the quarter, the company opened 33 new branches. Disbursals – The Company disbursed an amount of Rs 1,196 crore in Q2FY26 as against Rs 1,251 crore in Q2FY25. Assets under Management: AUM as of September 30, 2025 ended at Rs 12,847 crore, growth of 18% on YoY basis and 3% on qo-q basis. AUM is well distributed across 0.49 mn active loans. Collections & Asset Quality: Overall Collection efficiency and Unique customer collection efficiency for the quarter stood at 96.7% and 95.1% respectively. 30+ DPD ended at 12.17% as of September 30, 2025. Provisions: ECL provision carried on books was 243 crore (excluding ECL maintained on inter-corporate deposits), which translates to 1.89% of the overall AUM. Stage 3 provision was at 153 crore leading to a provision coverage ratio on stage 3 assets of 45.19% Borrowings: Total borrowings including debt securities are at Rs 8,376 crore as on September’25. The Company carries a liquidity of Rs 2,360 crore as on September ’25. Cost of incremental debt during the quarter dropped sharply to 8.56% (as against the cost of incremental debt of 8.59% for the previous quarter). Cost of funds on overall borrowing book for the quarter was at 9.27% as against 9.54% for the quarter ended June 30, 2025. Lakshmipathy Deenadayalan, Chairman & Managing Director, said: "As we had updated in the last quarter, we have seen a stable performance from Five Star during the current quarter, across various metrics. The downtrend that we witnessed in Q1FY26 has been arrested in the current quarter, and from here onwards, we believe that we would see some green shoots emerging in Q3 and a much stronger performance in Q4. We have taken several strategies and actions towards this across sourcing, credit underwriting, collections and risk oversight. These are marked out as focus areas for us in the quarters to come, and we believe these will pave the way for building a bigger and stronger portfolio in the coming quarters. While our asset quality and credit cost have seen marginal impact in the current quarter as compared to the previous quarter, these still stack up better than many of our peers operating in the small ticket secured / unsecured loans space. As I had said in the past also, we believe that a trend reversal is likely on the horizon and is expected to play out over the next couple of quarters. Our investment in physical infrastructure and people continues as can be seen from the addition of 33 branches and 769 Business & Collections Officers during Q2FY26. During this quarter, we disbursed Rs 1,196 crore of loans as against Rs 1,290 crore in Q1FY26, and the drop in disbursements can be attributed to the additional controls that have been implemented for the first time during this quarter towards onboarding the right customers. With our system getting attuned to these changes, we should start seeing increase in disbursements and increased AUM growth in the quarters to come. Our collections from unique customers and overall collections have remained stable compared to the previous quarter. Collections from unique customers stood at 95.1%, the same as last quarter, and we saw an improvement in the overall collections efficiency which went up from 96.3% in Q1FY26 to 96.7% in Q2FY26. These metrics show early signs of revival, though in a gradual manner. During the quarter, we availed incremental debt of Rs 1,068 crore and the cost of incremental debt came in at 8.56%, which is marginally lower than the cost of incremental debt borrowed during the previous quarter. Cost of funds on the book has dropped by about 27 bps, and given our cost of incremental debt, we should see improvement in the cost of funds for the full year. With incremental yields on assets coming in lower than the book yields, we expect to bridge a good portion of the yield drop through drop in cost of funds. We continue to have a robust liquidity on the balance sheet of Rs 2,360 crore. For the quarter, we achieved a PAT of 286 crore, 7% higher as compared to the PAT for the previous quarter. Even during these extremely challenging times, we have been able to achieve healthy return ratios, as can be evidenced in the increase in RoA from 7.24% in Q1FY26 to 7.49% in the current quarter and increase in RoE from 16.57% in the previous quarter to 16.91% in the current quarter." Result PDF