Conference Call with Five-Star Business Finance Management and Analysts on Q4FY25 & Full Year Performance and Outlook. Listen to the full earnings transcript.
Finance company Five-Star Business Finance announced Q4FY25 results Financial Highlights: Total income of Rs. 760 crore; YoY growth of 23%. PBT of Rs.371 crore; YoY growth of 18%. PAT of Rs.279 crore; YoY growth of 18%. ROA at 8.04%; QoQ decrease of 6 bps and YoY decrease of 39 bps. ROE at 18.36%; QoQ decrease of 13 bps and YoY decrease of 29 bps. Distribution: The Company has increased its branch presence to 748 branches across 11 states / UT. During the quarter, the company opened 19 new branches. Disbursals – The Company disbursed an amount of Rs 1,460 crore in Q4FY25 as against Rs 1,336 in Q4FY24. Assets under Management: AUM as of March 31, 2025 ended at Rs 11,877 crore, growth of 23% on YoY basis and 6% on QoQ basis. AUM is well distributed across 0.46 mn active loans. Collections & Asset Quality: Collection efficiency for the quarter stood at 97.7%. Unique customer collection efficiency for the quarter stood at 96.2%. 30+ DPD ended at 9.65% as of March 31, 2025. Provisions: ECL provision carried on books was 193 crore (excluding ECL maintained on inter-corporate deposits), which translates to 1.63% of the overall AUM. Stage 3 provision was at 109 crore leading to a provision coverage ratio on stage 3 assets of 51.31%. Borrowings: Total borrowings including debt securities are at Rs 7,922 crore as on March’25. The company continues to carry a liquidity of Rs 2,295 crore as on March’25. Cost of incremental debt during the quarter dropped sharply to 9.29% (as against the cost of incremental debt of 9.56% for the previous quarter). Cost of funds on overall borrowing book for the quarter was at 9.63%. Lakshmipathy Deenadayalan, Chairman & Managing Director, said: "It has been a good quarter for Five Star, and the most notable happening during the current quarter was that we were back on track as far as our disbursements are concerned, recording a QoQ disbursement growth of 55%. We had consciously slowed down our disbursements last quarter to get to an AUM growth of 25% and we were able to put our disbursements on track this quarter. Our portfolio grew by 6% on QoQ basis and 23% for the full year. The disruption in Karnataka on account of the ordinance made us pause our disbursements in the state leading a shortfall in growth for the full year. But, as a company, we are focused on “Quality Growth” and not growth for the sake of growth. There was a small uptick in our DPD and NPA numbers during the quarter, as a result of the trickling effect of overleverage crisis on secured portfolio coupled with the disruption in Karnataka. But I can still say confidently that this would still be the best asset quality amongst companies lending to our borrower profile. During this quarter, we disbursed Rs 1,460 crore of loans as against INR 941 crore in Q3FY25 recording a disbursement growth of 55%. We added 19 branches during Q4FY25 leading to a strong branch network of 748 branches across 10 states and 1 union territory. We continue to invest in and maintain an appropriate infrastructure framework which will ensure that the Company has the right framework to manage risk in an appropriate manner. On the collections front, we saw a good set of numbers for Q4, despite the headwinds mentioned above. Our unique customer collections came in at 96.2 %, which is a very marginal drop from the previous quarter, and we had an overall collection efficiency of 97.7%. 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 17 bps from 1.62% in Q3FY25 to 1.79% in the current quarter. We also saw a marginal inch-up in our 30+ which stood at 9.65% as of Q4FY25. We will continue our sharp focus on collections to ensure that the asset quality remains one of the best in the industry. \During the quarter, we availed incremental debt of Rs 1,100 crore and the cost of incremental debt came in at 9.29%, which is 27 bps lower than the cost of incremental debt borrowed during the previous quarter. We continue to diversify our borrowing sources leading to our borrowing from banks dropping from 79% in March’24 to 63% in March’25. Cost of funds on the book has almost remained flat at 9.63% for the quarter. In addition to unavailed sanctions of Rs 100 crore, we continue to have a robust liquidity on the balance sheet of Rs 2,295 crore. Our profitability remains one of the best in the industry and we achieved a PAT of 279 crore for the quarter, which is 18% higher than the PAT achieved in Q4FY24. For the full year, we touched the 4-digit PAT for the first time in the history of Five Star. We clocked a PAT of 1,073 crore as against 836 crore for FY24, a growth of 28%. To commemorate this achievement, the Board has also recommended a dividend of Rs 2 per share, which works out to 200% on the face value and translating to a dividend payout of 5.5%. I would also like to assure that this would not have any major impact on our capital adequacy or our need for capital in the future." Result PDF
Finance company Five-Star Business Finance announced Q3FY25 results Total income of Rs. 731 crore; YoY growth of 28%. PBT of Rs.365 crore; YoY growth of 26%. PAT of Rs.274 crore; YoY growth of 26%. ROA at 8.10%; QoQ decrease of 26 bps and YoY decrease of 15 bps. ROE at 18.49%; QoQ decrease of 53 bps and YoY increase of 75 bps. Distribution: The Company has increased its branch presence to 729 branches across 10 states / UT. During the quarter, the company opened 69 new branches. Disbursals – The Company disbursed an amount of Rs 941 crore in Q3FY25 as against Rs 1,209 crore in Q3FY24. Assets under Management: AUM as of December 31, 2024 ended at Rs 11,178 crore, growth of 25% on YoY basis and 2% on QoQ basis. AUM is well distributed across 0.44 mn active loans. Collections & Asset Quality: Collection efficiency for the quarter stood at 98%. Unique customer collection efficiency for the quarter stood at 96.7%. 30+ DPD ended at 9.16% as of December 31, 2024. Provisions: ECL provision carried on books was 185 crore (excluding ECL maintained on inter-corporate deposits), which translates to 1.66% of the overall AUM. Stage 3 provision was at 91 crore leading to a provision coverage ratio on stage 3 assets of 50.20%. Borrowings: Total borrowings including debt securities are at Rs 7,362 crore as on December’24. The company continues to carry a liquidity of Rs 2,145 crore as on December’24. Cost of incremental debt during the quarter almost remained flat at 9.56% as against Q2FY25. Cost of funds on overall borrowing book for the quarter was at 9.63%. Lakshmipathy Deenadayalan, Chairman & Managing Director, said: Any Financial Institution needs to take care of 2 important functions – business and collections – to ensure that they deliver strong results across quarters. Five Star is fundamentally a collections first Company, which is also reflected in our result during the current quarter. The track record of the Company over the last many years clearly demonstrate that we will be able to maintain strong asset quality even in the most challenging times and this quarter is no different. We continue to maintain our philosophy of asset quality being the first focus followed by profitability and growth. Needless to say, the last 2-3 quarters have been challenging for the entire financial services sector, especially for the small ticket lenders and more so from a collections perspective, given the overleverage and consequent stress build up. The last couple of quarters saw the unsecured lenders go through significant stress, which continues in Q3FY25 as well. Given a crisis of this magnitude, there will be some trickling effect on the other lenders as well, and there was a marginal impact that was witnessed by Five Star during this quarter. However, I am happy to say that despite the marginal impact witnessed during the quarter, our asset quality and profitability continue to remain robust, when compared with many other players operating in this space. We have also grown a portfolio during the quarter, albeit at a slightly slower pace, with a view to be in line with our growth guidance. During this quarter, we disbursed Rs 941 crore of loans as against INR 1,251 crore in Q2FY25, with a clear view to bring down to our portfolio growth in line with our guidance. We added 69 branches during Q3FY25 (a combination of fresh branches and branches that were split from the existing branches which have reached a certain size), leading to a branch network of 729 branches across 9 states and 1 union territory. We continue to invest in and maintain an appropriate infrastructure framework which will ensure that the Company has the right framework to manage risk in an appropriate manner. On the collections front, we saw a good set of numbers for Q3, despite the headwinds mentioned above. Our unique customer collections came in at 96.7 %, which is a very marginal drop from the previous quarter, and we had a total collection efficiency of 98%. 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 15 bps from 1.47% in Q2FY25 to 1.62%. We also saw a marginal inch-up in our 30+, which stood at 9.16% as of Q3FY25. We will continue our sharp focus on collections to ensure that the asset quality remains one of the best in the industry. During the quarter, we received incremental debt sanctions of Rs 1,400 crore, availing Rs 1,045 crore. We continue to diversify our borrowing sources and towards this we obtained funding from HDFC Mutual Fund, HSBC Mutual Fund and SIDBI during this quarter. This has helped bring down our bank borrowing from 70% as of September’24 to 65% as of December’24.On a YoY basis, the proportion of our borrowing from banks has dropped from 84% in December’23 to 65% in December’24. Cost of funds on the book has almost remained flat at 9.63% for the quarter. In addition to unavailed sanctions of Rs 600 crore, we have a robust liquidity on the balance sheet of Rs 2,145 crore. Result PDF
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
Conference Call with Five-Star Business Finance Management and Analysts on Q1FY25 Performance and Outlook. Listen to the full earnings transcript.
Finance company Five-Star Business Finance announced Q1FY25 results: Financial Highlights: Total income of Rs 669 crore; YoY growth of 38% PBT of Rs.336 crore; YoY growth of 37% PAT of Rs.252 crore; YoY growth of 37% ROA at 8.23%; QoQ decroreease of 20 bps and YoY decroreease of 18 bps. ROE at 18.95%; QoQ incroreease of 30 bps and YoY incroreease of 233 bps. Business Highlights: Distribution: The Company has incroreeased its branch presence to 547 branches acroreoss 10 states / UT. During the quarter, the company opened 27 new branches. Disbursals – The Company disbursed an amount of Rs 1,318 crore, up by 16% on YoY basis and marginally down by 1% on QoQ basis. Assets under Management: AUM as of June 30, 2024 ended at Rs 10,344 crore, growth of 36% on YoY basis and 7% on QoQ basis. AUM is well distributed acroreoss 0.41 million active loans Collections & Asset Quality: Collection efficiency for the quarter stood at 98.5%. Unique customer collection efficiency for the quarter stood at 97.2%. 30+ DPD ended at 8.11% as of June 30, 2024. Provisions: ECL provision carried on books was 170 crore, which translates to 1.63% of the overall AUM. Stage 3 provision was at 76 crore leading to a provision coverage ratio on stage 3 assets of 52.08% Borrowings: Total borrowings including debt securities are at Rs 6,724 crore as on June’24. The company continues to carry a liquidity of Rs 1,891 crore as on June’24. Cost of incroreemental debt during the quarter was 9.47% which improved by 11 bp on QoQ basis. Cost of funds on overall borrowing book was at 9.65%, up by 1 bps on QoQ basis. Commenting on the results, Lakshmipathy Deenadayalan, Chairman & Managing Director, said, This is a very special quarter for Five Star as we touched the 5-digit AUM for the first time – we croreossed the AUM of 10,000 croreores in this quarter. Five Star continues its journey of strategic and execution excellence which is reflected acroreoss the various verticals – business, croreedit, collections, fundraising, technology, risk management, etc. Barring marginal impact of heat and elections, the quarter saw robust momentum acroreoss various aspects. During this quarter, we disbursed Rs 1,318 croreores of loans which is almost flat to the previous quarter. On a YoY basis, we registered a disbursement growth of 16%. We added 27 branches during Q1FY2025, leading to a strong branch network of 547 branches acroreoss 9 states and 1 union territory. On the collections front, we saw a good set of numbers for Q1. We had a collection efficiency of 98.5% and unique customer collections came in at 97.2%. There was a marginal incroreease in gross NPA by 3 bps from 1.38% in Q4FY24 to 1.41% and in 30+ by 22 bps from 7.89% in Q4FY24 to 8.11% being a typical Q1 phenomenon. During the quarter, we also raised incroreemental debt sanctions of Rs 850 crore availing Rs 825 crore. We were able to obtain a large ticket sanction from IFC, one of the largest DFI acroreoss the globe. IFC subscroreibed to our NCDs for a quantum of INR 500 crore. We are progressing well on our intent to diversify our borrowing sources with the proportion of our borrowing from banks dropping from 84% as of June’23 to 74% as of June’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 1,891 crore along with unavailed sanctions of Rs 400 crore. We continued to growconsistentlyanddeliveredan AUMgrowth of 36%YoY.PAT for Q1FY25grew at 37% as compared to Q1FY24, with one of the best ROA and ROE ratios. Result PDF