Five-Star's record ₹1,496 cr disbursements power Q1 growth
Net profit rises 2% YoY to ₹271 cr; AUM up 10%. GS3 edges to 3.46% but cost of funds drops. Management reiterates 20% AUM growth guidance.
— 3 earlier stories on Five-Star Business Finance Ltd. →What's new
- Disbursements hit a record ₹1,496 crore, up 23% sequentially.
- Net profit rises 2% YoY to ₹271 crore; AUM grows 10% YoY to ₹13,722 crore.
- Gross stage-3 edges up to 3.46% from 3.37%; cost of funds falls 15 bps to 8.80%.
Why this matters
The record disbursements signal a return to growth momentum after a soft patch. But asset quality is still inching up, and credit costs remain above historical levels. The next test is whether GS3 stabilises without crimping profitability.
What we're watching
- Whether disbursement momentum sustains through Q2 and Q3.
- Gross stage-3 trajectory and slippage ratio, currently steady at 0.70%.
- Any further reduction in cost of funds as the RBI cycle shifts.
The full read
Five-Star Business Finance delivered a record quarter for disbursements: ₹1,496 crore, up 23% sequentially and 16% year-on-year. Net profit rose a modest 2% to ₹271 crore, while AUM grew 10% to ₹13,722 crore. The headline growth is clean, but asset quality remains a watch item — gross stage-3 inched up to 3.46% from 3.37% in March. The offset: cost of funds dropped 15 bps to 8.80%, and management reiterated its full-year AUM growth guidance of 20%. This was a strong start to the fiscal year. What changes from here is whether the GS3 stabilises as the loan book ages, or whether elevated credit costs eat into the margin benefit from lower funding costs.
Questions answered
- What drove Five-Star's record disbursements in Q1?
- Strong demand in secured MSME and home improvement loans, with the company's branch expansion and digital sourcing initiatives gaining traction. Management attributed it to a pickup in economic activity and seasonality.
- Why did gross stage-3 rise despite better collections?
- The GS3 ratio inched up to 3.46% from 3.37% as growth in AUM partly masked a small absolute increase in NPAs. Collection efficiency stayed strong at 97.9%, and the slippage ratio remained steady at 0.70%, indicating the rise is not a broad trend.
- How significant is the 15 bps drop in cost of funds?
- It is the first meaningful decline after a period of tight liquidity, reflecting some easing in wholesale borrowing costs. If sustained, it can support net interest margins, which were flat in Q1.
- Is Five-Star on track to meet its 20% AUM growth guidance?
- Yes. AUM grew 10% YoY in Q1, which implies the back half needs to accelerate. The record disbursements in Q1 provide a good base, and management expressed confidence in achieving the target.
Five-Star Business Finance Ltd.
Latest quarter · Jun 2026
Leverage & growth
Story so far
All notes on FIVESTAR →- 25 Jul 2026 · 7:24 PM IST Five-Star's record ₹1,496 cr disbursements power Q1 growth
- 1d ago Five-Star lifts credit cost view, trims ROA target despite record lending
- 3d ago Five-Star Business Finance Q1 profit up but asset quality slips
- 3d ago Five-Star Q1 net profit flat, asset quality softens within band