Finance company Five-Star Business Finance announced Q2FY25 results Total income of Rs 706 crore; YoY growth of 35%. PBT of Rs 358 crore; YoY growth of 34%. PAT of Rs 268 crore; YoY growth of 34%. ROA at 8.36%; QoQ increase of 13 bps and YoY decrease of 11 bps. ROE at 19.02%; QoQ increase of 7 bps and YoY increase of 194 bps. Assets under Management: AUM as of September 30, 2024 ended at Rs 10,927 crore, growth of 32% on YoY basis and 6% on QoQ basis. AUM is well distributed across 0.43 mn active loans. Collections & Asset Quality: Collection efficiency for the quarter stood at 98.4%. Unique customer collection efficiency for the quarter stood at 97%. 30+ DPD ended at 8.44% as of September 30, 2024. Provisions: ECL provision carried on books was 180 crore, which translates to 1.65% of the overall AUM. Stage 3 provision was at 83 crore leading to a provision coverage ratio on stage 3 assets of 51.80% Borrowings: Total borrowings including debt securities are at Rs 6,880 crore as on September’24. The company continues to carry a liquidity of Rs 1,699 crore as on September’24. Cost of incremental debt during the quarter was 9.52% as against 9.47% in Q1FY25. Cost of funds on overall borrowing book remains flat at 9.65%. Lakshmipathy Deenadayalan, Chairman & Managing Director, said: We have had a good quarter in Q2, despite some sectoral headwinds, especially those being faced by unsecured lenders. Being a fully secured lending product coupled with strong underwriting and collections methodologies has helped Five-Star come out with a good set of results even during the current quarter. During this quarter, we disbursed Rs 1,251 crore of loans as against Rs 1,318 crore in Q1FY2025. This is a conscious strategy to moderate our portfolio growth for the full year, leading to a slight drop in disbursements on a QoQ basis. On a YoY basis, we registered a disbursement growth of 4%. We added 113 branches during Q2FY2025 (a combination of fresh branches and branches that were split from the existing branches which have reached a certain size), leading to a strong branch network of 660 branches across 9 states and 1 union territory. On the collections front, we saw a good set of numbers for Q2, despite the headwinds mentioned above. Our unique customer collections came in at 97 %, which is a very marginal drop from the previous quarter and we had a total collection efficiency of 98.4%. When viewed from a sectoral context, both are impressive numbers. Consequent to the slight drop in collections, there was also a marginal increase in gross NPA by 6 bps from 1.41% in Q1FY25 to 1.47% and our 30+ as of Q2FY25 stood at 8.44%. During the quarter, we also raised incremental debt sanctions of Rs 420 crore, though we availed Rs 575 crore including spillovers from some earlier sanctions. Our intent to diversify our borrowing sources got a fillip as we were able to onboard 2 AMCs as lenders to us – Kotak Mutual Fund and Nippon Mutual Fund. Our proportion of borrowing from banks dropped from 74% as of June’24 to 70% as of September’24. On a YoY basis, the proportion of our borrowing from banks has dropped from 85% in Sep’23 to 70% in Sep’24. Cost of funds on the book has almost remained flat at 9.65% for the quarter. We continue to have a robust liquidity on the balance sheet of Rs 1,699 crore along with unavailed sanctions of Rs 245 crore. Result PDF