Five-Star Business Finance FY26 Results: Profit Up Marginally, NPAs Increase

Profit After Tax: ₹1,098.75 crore
Total Revenue: ₹3,245.97 crore

Reader Takeaway: Profit growth was modest, but rising NPAs are a key concern for investors.

What just happened

Five-Star Business Finance Ltd announced its financial results for the fiscal year ending March 31, 2026 (FY26). The company reported a Profit After Tax (PAT) of ₹1,098.75 crore, a slight increase from ₹1,072.49 crore in the previous fiscal year (FY25). Total revenue for FY26 stood at ₹3,245.97 crore, up 13.3% from ₹2,866.02 crore in FY25. The company's Assets Under Management (AUM) grew by 11.3% to ₹13,224.65 crore.

Why this matters

Despite operating in a challenging financial services environment marked by overleveraging issues, Five-Star Business Finance managed to maintain profitability and grow its loan portfolio. However, a significant concern is the rise in asset quality, with Gross Non-Performing Assets (NPAs) increasing. The company's ability to manage these NPAs will be crucial for future performance.

The backstory

In FY25, Five-Star Business Finance had reported a PAT of ₹1,072.49 crore and revenue of ₹2,866.02 crore. At that time, its Gross NPA stood at 1.79%. The company had then focused on managing its borrowing costs, which were at 9.46% for incremental borrowings.

What changes now

The company's board has recommended a final dividend of ₹2 per share for FY26. Furthermore, it is proposing to increase its borrowing limits to ₹13,000 crore and plans a Non-Convertible Debenture (NCD) issuance of up to ₹5,000 crore to fund business expansion. M/s Suri & Co has been appointed as Joint Statutory Auditors for FY27-FY29.

Risks to watch

The primary concern highlighted is the deterioration in asset quality, with Gross NPA rising to 3.37% and Net NPA to 2.00%. The company attributes this to industry-wide stress but has not resorted to aggressive write-offs. Improving collection efficiency and recovery remains key.

Peer comparison

While specific peer data is not provided in the filing, the increase in NPAs is noted as an industry-wide trend, suggesting that other lenders in the same segment may also be facing similar asset quality pressures.

Context metrics (time-bound)

• Incremental Borrowing Cost: Reduced by 96 basis points to 8.50% in FY26 from 9.46% in FY25.
• Digital Collections: Improved significantly to 84% in March 2026 from 53% in March 2024.
• Branch Network: Expanded to 844 branches as of March 31, 2026, from 748 in the prior year.
• Capital Adequacy: Remains strong at 51.89%, well above the RBI mandate.

What to track next

Investors should monitor the company's success in improving its NPA levels through enhanced collection and recovery efforts. The effectiveness of the new auditors and management in addressing asset quality issues will be a key focus in the upcoming fiscal year.