Five-Star Business Finance Reports FY26 Profit, Eyes 20% AUM Growth

Five-Star Business Finance Ltd. has reported its audited financial results for the fiscal year ended March 31, 2026. The company posted a Profit After Tax (PAT) of ₹10,988 million on a loan portfolio of ₹132,246 million for the full fiscal year. In the fourth quarter of FY26 (Q4FY26), Five-Star achieved strong customer collection efficiency of 98.1%. Looking ahead, the company anticipates around 20% Assets Under Management (AUM) growth for FY27, signaling a focus on accelerating expansion.

Financial Results

Five-Star Business Finance Ltd. announced its audited financial results for the fiscal year and quarter ending March 31, 2026. The company reported a full-year PAT of ₹10,988 million on a loan portfolio of ₹132,246 million. For the fourth quarter of FY26 (Q4FY26), Total Income was ₹8,261 million, Net Interest Income was ₹6,447 million, and PAT stood at ₹2,693 million. Gross Non-Performing Assets (NPA) for Q4FY26 were reported at 3.37%.

Growth Strategy and Outlook

The results reflect a year of steady AUM growth and modest PAT increase, with a firm focus on maintaining collection efficiency. The guidance for FY27 suggests an acceleration in business expansion, a key metric for investors in the lending sector. The company aims to balance this expansion with quality and profitability, backed by its established collection methods.

Company Profile and Governance

Incorporated in 1984, Five-Star Business Finance has evolved into a significant Non-Banking Financial Company (NBFC) focused on secured loans for micro-entrepreneurs and self-employed individuals. The company, which went public in November 2022, has been backed by prominent private equity investors like KKR, TPG, and Norwest Venture Partners. Recent corporate actions include the resignation of former CEO Rangarajan Krishnan in August 2025 and the completion of Independent Director Bhama Krishnamurthy's term in April 2026.

Asset Quality and Risks

Asset quality remains a critical watchpoint. Gross NPAs rose to 3.37% in Q4FY26. This follows a previous rise in Q3FY26 where Gross Stage 3 Assets reached 3.18%, pointing to a trend of increasing delinquencies. The company's future performance is also subject to general business risks including economic fluctuations and competition, as noted in the filing.

Competitive Landscape

Five-Star operates in the NBFC sector alongside diversified players like Cholamandalam Investment, with an AUM exceeding INR 2.27 Lakh Cr, and gold loan specialists such as Muthoot Finance, the largest in that segment. Its focus on serving the lower-income segment, similar to affordable housing finance peers like Aavas Financiers, carves out a distinct market position.

Investor Focus

Investors will be monitoring progress towards the 20% AUM growth target for FY27 and its impact on profitability. Key areas to watch include asset quality indicators, particularly NPA levels and collection efficiency, as the company accelerates its loan book expansion. Any further strategic moves related to diversification of funding sources and management appointments will also be noted.