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Five-Star Business Finance Q3 PAT at ₹277 Cr; GNPA Rises to 3.18% Amid Collection Focus
Five-Star Business Finance reported a modest 1% YoY PAT growth to ₹277 Cr for Q3FY26, while AUM grew 16% YoY to ₹12,964 Cr. Asset quality saw significant pressure as Gross Stage 3 assets spiked to 3.18% from 1.62% YoY, leading management to intentionally reduce disbursements by 18% QoQ to focus on collections. Despite the asset quality stress, the company maintained a healthy RoA of 7.00% and saw a sharp improvement in the cost of incremental debt to 8.19%. The company is aggressively expanding its collection vertical, nearly doubling its collection officer headcount YoY to 2,452.
Key Highlights
AUM grew 16% YoY to ₹12,964 Cr, though disbursements fell 18% QoQ to ₹976 Cr due to a strategic shift toward collections.
Gross Stage 3 assets increased to 3.18% vs 1.62% YoY; Net Stage 3 assets rose to 1.94% vs 0.81% YoY.
Return on Assets (RoA) compressed to 7.00% from 8.10% YoY, while RoE dropped to 15.80% from 18.49% YoY.
Cost of funds improved to 9.12% from 9.63% YoY, supported by a low incremental debt cost of 8.19% during the quarter.
Branch network expanded to 835 branches across 11 states with 35 new branches added in Q3.
💼 Action for Investors
Investors should exercise caution as the sharp rise in NPAs and the intentional slowdown in disbursements indicate significant stress in the borrower segment. Monitor Q4 results closely to see if the expanded collection team can successfully roll back slippages and stabilize asset quality as guided by management.
Five-Star Business Finance Q3 PAT at ₹277 Cr; Asset Quality Weakens as GNPA Rises to 3.18%
Five-Star Business Finance reported a marginal year-on-year net profit growth to ₹277 crore for Q3 FY26, though profit declined sequentially from ₹286 crore in Q2. Total income grew by 12.5% YoY to ₹822 crore, but the bottom line was pressured by a significant spike in impairment costs, which rose to ₹57 crore from ₹23 crore in the previous year's quarter. Most concerning for investors is the sharp deterioration in asset quality, with Gross Stage 3 assets climbing to 3.18% from 1.79% in March 2025. However, the company remains exceptionally well-capitalized with a CRAR of 51.63%.
Key Highlights
Total Income for Q3 FY26 increased 12.5% YoY to ₹822.22 crore.
Net Profit stood at ₹277.03 crore, a sequential decline of 3.2% from ₹286.14 crore in Q2 FY26.
Gross Stage 3 Assets (GNPA) ratio deteriorated significantly to 3.18% compared to 1.79% in March 2025.
Impairment on financial instruments spiked to ₹57.10 crore in Q3 FY26 versus ₹23.29 crore in Q3 FY25.
Capital Adequacy Ratio (CRAR) remains very strong at 51.63% with a low Debt-Equity ratio of 1.16.
💼 Action for Investors
Investors should monitor the rising NPA trend closely as it indicates increasing credit stress in the small business lending segment. While the company has a massive capital cushion, the rising credit costs are likely to cap near-term stock performance until asset quality stabilizes.