Five-Star Business Finance Q1 profit up but asset quality slips
Net profit at ₹271.4 cr on income of ₹838.7 cr; gross stage 3 rises to 3.46%, credit costs slightly above guidance.
— 3 earlier stories on Five-Star Business Finance Ltd. →What's new
- Q1 FY27 net profit of ₹271.4 crore on total income of ₹838.7 crore.
- Gross stage 3 ratio rose to 3.46% from 3.37% sequentially.
- Annualised credit costs of ~1.8% marginally above the guided range.
Why this matters
The uptick in stage 3 assets and credit costs breaching the guided band signal that asset quality normalization is underway. For a stock trading at 13.3x earnings, the open question is whether this is a one-quarter blip or the start of a trend.
What we're watching
- Whether credit costs revert to the guided range in Q2.
- Loan growth pace: AUM grew only ~2% sequentially.
- RBI's joint audit mandate: appointment of Suri & Co as joint statutory auditor.
The full read
Five-Star Business Finance opened FY27 with a net profit of ₹271.4 crore on total income of ₹838.7 crore. But the asset quality picture is less comforting: the gross stage 3 ratio edged up to 3.46% from 3.37% in March, and annualised credit costs came in at about 1.8% of assets under management, marginally above the company's own guided range. AUM grew only ~2% sequentially, suggesting growth is steady but not accelerating. The board also made several governance moves, including a new independent director, an extended compliance officer term, and a joint auditor proposal to meet RBI norms, but these are procedural. What matters is whether the credit-cost creep is a one-quarter blip or the start of a trend. If the full-year guidance holds, this quarter is just noise. If it doesn't, the margin story changes.
Questions answered
- What was Five-Star's net profit for Q1 FY27?
- The company reported a net profit of ₹271.4 crore on total income of ₹838.7 crore.
- How did asset quality change from the previous quarter?
- The gross stage 3 ratio worsened to 3.46% from 3.37% in March 2026, a sequential deterioration of 9 basis points.
- Were credit costs within management's guidance?
- No. Annualised credit costs came in at about 1.8% of assets under management, slightly above the company's guided range for the full year.
- What governance changes did the board approve?
- The board appointed Sreeram Ranganathan Iyer as an independent director for five years, extended the chief compliance officer's tenure by three years, and proposed Suri & Co as joint statutory auditor to meet RBI's mandatory joint audit requirement.
- What was the sequential AUM growth?
- Assets under management grew by approximately 2% quarter-on-quarter, indicating steady but modest growth.
Five-Star Business Finance Ltd.
Latest quarter · Jun 2026
Leverage & growth
Story so far
All notes on FIVESTAR →- 25 Jul 2026 · 7:19 PM IST Five-Star Business Finance Q1 profit up but asset quality slips
- 1d ago Five-Star lifts credit cost view, trims ROA target despite record lending
- 3d ago Five-Star's record ₹1,496 cr disbursements power Q1 growth
- 3d ago Five-Star Q1 net profit flat, asset quality softens within band