Five-Star Business Finance Limited has informed the Exchange about Transcript
FIVESTAR · price
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Five-Star Business Finance reported a stable Q2 FY'26 with profit after tax of Rs. 286 crores, up 7% sequentially, while ROA improved to 7.49% and ROE to 16.91%. Loan disbursements stood at Rs. 1,196 crores, lower than Rs. 1,290 crores in Q1 due to tighter underwriting controls, but management expects disbursements to improve from Q3 and accelerate in Q4. Cost of incremental debt dropped to 8.56% and overall cost of funds fell 27 bps to 9.27%, helping spreads hold steady at around 13.9%. The company maintained its FY'26 credit cost guidance of 1.25%-1.35% of total assets and AUM growth guidance of 25%. Asset quality and collection efficiencies were stable, with unique customer collections at 95.1% and overall efficiency improving to 96.7%. A new housing loan product was launched in October with average ticket size of Rs. 6-8 lakhs, expected to contribute 1-1.5% of AUM this year. J.P. Morgan invested around Rs. 650 crores in the company's PTCs during the quarter.
Shareholders can take comfort from stable quarterly performance after the Q1 stress and management's clear roadmap of improvement in disbursements and collections from Q3 onwards. Lower cost of funds and steady spreads, combined with maintained full-year guidance, suggest margin and earnings trajectory should improve in the second half, though ROA is expected to compress to 6%-6.5% once housing loans scale up.