Star Housing Finance Ltd (539017)
Latest quarterly results (Q3 FY26)
In its latest reported quarter, Q3 FY26, Star Housing's net interest income was ₹12.2 Cr (+2.6% year on year, +7.9% on the previous quarter), and net profit ₹0.5 Cr (-76.0% year on year).
| Q3 FY26 (₹ Cr) | Value | YoY vs Q3 FY25 | QoQ |
|---|---|---|---|
| Net interest income | ₹12.2 | +2.6% | +7.9% |
| Net profit | ₹0.5 | -76.0% | -72.6% |
| EPS (₹) | 0.03 | -80.0% | -76.9% |
| Gross NPA | 1.84% | — | — |
📢 Recent Corporate Announcements
Star Housing Finance Ltd issued a corrigendum to its prior intimation dated September 9, 2026, regarding a forensic audit initiated by its lenders. The company clarified that the appointed forensic auditor is Ravi Rajan & Co. LLP, Chartered Accountants, rather than Ravi Ranjan & Co. LLP as previously reported. While this specific filing is a clerical correction, the underlying forensic audit initiated by lenders remains a critical watchpoint for the ₹109 Cr market cap housing finance company.
- Corrigendum issued regarding the prior intimation dated September 9, 2026
- Auditor name corrected from Ravi Ranjan & Co. LLP to Ravi Rajan & Co. LLP
- Forensic audit was initiated by the company's lenders
- Current company market cap stands at ₹109 Cr against net worth of ₹146 Cr
Star Housing Finance Limited has received an order from the National Housing Bank (NHB) classifying the company's account as 'Fraud'. This action follows the completion of a forensic audit conducted by auditors appointed by NHB. The company stated that management is reviewing the order to determine the subsequent course of action. With a market cap of Rs 109 Cr and TTM revenue of Rs 101 Cr, this severe regulatory action poses major risks to borrowing lines and ongoing operations.
- NHB issued an order on August 27, 2026, classifying the company's account as 'Fraud'
- The regulatory classification is based on findings from an NHB-appointed forensic audit
- Management is currently reviewing the order to determine legal and operational remedies
- The company operates with a market capitalization of Rs 109 Cr and net worth of Rs 146 Cr
Star Housing Finance has received an order from the National Housing Bank (NHB) classifying the company's account as Fraud. The order follows a forensic audit conducted by auditors appointed by the NHB. Management stated it is currently reviewing the order to determine the appropriate course of action. For a housing finance company with a market cap of ₹109 Cr and TTM revenue of ₹101 Cr, this severe regulatory action creates critical risks around lender lines and licensing.
- Received an order from National Housing Bank classifying the company's account as Fraud
- Action follows a forensic audit conducted by auditors appointed by NHB
- Filing intimated to BSE on August 27, 2026
- Management is reviewing the order to determine appropriate legal and regulatory steps
India Ratings and Research has migrated Star Housing Finance Limited's credit ratings to 'IND D (ISSUER NOT COOPERATING)' across ₹700 crore (INR 7,000 million) of debt facilities. The action covers ₹450 crore of bank loan facilities and ₹250 crore of non-convertible debentures after the company failed to provide adequate information or participate in the review. The rating agency highlighted that the debenture trustee confirmed the company is currently under default. The rated debt facilities represent ~642% of the company's current market capitalisation of ₹109 crore.
- Migrated ₹450 crore (INR 4,500 million) of bank loan facilities to 'IND D (ISSUER NOT COOPERATING)'
- Migrated ₹250 crore (INR 2,500 million) of NCD facilities to 'IND D (ISSUER NOT COOPERATING)'
- Rating agency confirmed through the debenture trustee that the company is presently in default
- Company failed to provide financial updates or engage in management interactions despite follow-ups
- Total rated debt of ₹700 crore substantially exceeds the company's net worth of ₹146 crore
Certain promoters, promoter group members, and a public shareholder of Star Housing Finance have executed a non-binding Letter of Intent (LOI) to sell 2,64,78,962 equity shares. This represents 33.52% of the company's paid-up equity capital to Cateye Consultancy Services Private Limited. The transaction is subject to due diligence, price negotiation, and mandatory regulatory approvals from the RBI and SEBI. With a current market cap of just Rs 109 Cr, this potential change in control is highly material for the company's future strategic direction.
- Proposed sale of 2,64,78,962 equity shares to Cateye Consultancy Services Private Limited.
- The stake involved constitutes 33.52% of the total paid-up equity share capital.
- LOI was originally dated July 16, 2026, with the company receiving formal intimation on August 13, 2026.
- The seller list includes 18 promoter/promoter group entities and one public entity, Arkfin Investments and Advisors Private Limited.
- Transaction is contingent on RBI approval and compliance with SEBI Substantial Acquisition of Shares and Takeovers (SAST) Regulations.
Star Housing Finance's FY26 Secretarial Compliance Report reveals several breaches of SEBI (LODR) regulations, primarily regarding board and committee composition. The company failed to maintain the minimum requirement of 6 directors for top 2000 entities and did not fill vacancies within the mandated 3-month window. Most notably, the Audit and Nomination & Remuneration Committees were severely under-strength, with the Audit Committee having only 1 member as of March 31, 2026. Management cited 'back-to-back resignations' as the cause and claims to be in advanced stages of appointing new directors.
- Board size fell to 5 directors on August 15, 2025, failing the minimum requirement of 6 for top 2000 listed entities.
- Audit Committee membership dropped from 3 to 1 director by March 31, 2026, following multiple resignations.
- Nomination and Remuneration Committee also reduced to a single member as of March 31, 2026.
- Company failed to fill director vacancies within the statutory 3-month timeline during the review period.
The Board of Star Housing Finance has rejected a request from its promoters to be reclassified as 'Public' shareholders. In a rare and candid disclosure, the Board cited the company's current liquidity challenges and difficulties in meeting timely debt repayments and statutory dues as primary reasons for the rejection. The decision also factors in ongoing discussions with a proposed investor and active revival efforts, suggesting the company is in a critical phase of financial restructuring.
- Board meeting held on July 11, 2026, to consider promoter requests dated June 30 and July 1, 2026
- Company explicitly admitted to 'challenges in making timely repayments and statutory dues'
- Reclassification request under Regulation 31A of SEBI LODR was formally declined at this stage
- Management confirmed ongoing discussions with a 'proposed investor' as part of revival efforts
Star Housing Finance has issued a corrigendum regarding the appointment of Mr. Abhaykumar J. Pal as an Additional Director (Independent). The effective date of his appointment has been corrected to July 8, 2026, from the previously reported July 7, 2026. Mr. Pal is a Practising Company Secretary with over 10 years of experience in NBFC compliance and corporate governance. His appointment is for a one-year term and remains subject to shareholder approval.
- Effective date of appointment corrected to July 8, 2026
- Appointment term is fixed for 1 year
- Mr. Abhaykumar J. Pal brings over 10 years of experience in corporate and securities laws
- Appointment is subject to approval by the company's members
Star Housing Finance Ltd has appointed Mr. Abhaykumar J. Pal as an Additional Director in the Non-Executive Independent category, effective July 7, 2026. Mr. Pal is a Fellow Member of the ICSI with over 10 years of experience in corporate laws, securities laws, and NBFC compliance management. The appointment is for a tenure of one year and is subject to shareholder approval. This addition aims to strengthen the board's expertise in regulatory compliance and corporate governance.
- Appointment of Mr. Abhaykumar J. Pal effective from July 7, 2026
- Appointed for a specific term of 1 year, subject to shareholder approval
- Director brings over 10 years of experience in corporate laws and board advisory
- Holds specialized ICSI certification in NBFC End-to-End Compliance Management
Financial Performance
Revenue Growth by Segment
Interest income, the primary revenue segment, grew 21.33% YoY in Q2 FY26 to INR 45.93 Cr, driven by a 9.55% YoY increase in Assets Under Management (AUM) which reached INR 567.27 Cr. Fee and commission income contributed INR 0.88 Cr in H1 FY26, a slight decline from INR 1.02 Cr YoY.
Geographic Revenue Split
The company operates across 6 states including Maharashtra, Madhya Pradesh, NCR, Gujarat, Rajasthan, and Tamil Nadu. While specific percentage splits per state are not disclosed, the company has expanded its footprint to 50+ locations served by 35 physical branches to capture rural and semi-urban demand.
Profitability Margins
Profit After Tax (PAT) for FY25 was INR 11.10 Cr, up 25% from INR 8.88 Cr in FY24. Net Interest Margin (NIM) stood at 7.69% in FY25 and remained healthy at 7.65% in H1 FY26. Return on Net Worth (RoNW) improved from 7.42% to 8.02% YoY, reflecting better capital efficiency as operations scaled.
EBITDA Margin
Profit Before Tax (PBT) margin for FY25 was 14.94% (INR 14.19 Cr PBT on INR 94.96 Cr Gross Income). In H1 FY26, PBT stood at INR 4.08 Cr, impacted by higher finance costs which rose to INR 26.72 Cr from INR 21.32 Cr YoY due to the increasing interest rate environment.
Capital Expenditure
Depreciation and amortization expenses increased significantly to INR 5.12 Cr in FY25 from INR 0.67 Cr in FY24, indicating substantial historical investment in physical branch infrastructure and technology systems to support the growth of its 35-branch network.
Credit Rating & Borrowing
Star HFL maintains a credit rating of BBB Stable from both CARE and India Ratings. The average cost of funds increased from 11.50% in FY24 to 12.78% in FY25, reflecting a 128 bps rise in borrowing costs from its 10+ lending partners.
Operational Drivers
Raw Materials
The primary 'raw material' for Star HFL is Capital/Debt Funds, which represented 48.9% of gross income in FY25 (Finance Cost of INR 46.49 Cr vs Gross Income of INR 94.96 Cr).
Import Sources
Funds are sourced domestically within India from a mix of public sector banks, private banks, and financial institutions.
Key Suppliers
Key lenders providing capital include Indian Overseas Bank, Mas Financial Services, Suryoday Small Finance Bank, LIC Housing Finance, Bajaj Finance, ESAF Small Finance Bank, Northern Arc Capital, Poonawala Fincorp, Shriram Finance, and Sundaram Finance.
Capacity Expansion
Current capacity includes 35 physical branches and 50+ points of presence with 266 employees. The company plans continued expansion into Tier II and III towns to tap into latent demand for affordable housing finance.
Raw Material Costs
Finance costs (cost of capital) rose 25.3% YoY in H1 FY26 to INR 26.72 Cr. The company manages this through a high-yield lending strategy, with average yield on advances increasing from 16.96% to 19.24% YoY.
Manufacturing Efficiency
Not applicable as a service-based financial institution; however, the company leverages AI and ML to streamline underwriting and predict default risks.
Logistics & Distribution
Distribution is handled through 35 physical branches, which act as localized hubs for customer acquisition and credit appraisal in rural geographies.
Strategic Growth
Expected Growth Rate
13%
Growth Strategy
Growth will be achieved by scaling AUM through on-book disbursements and co-lending partnerships with banks, expanding the physical branch network in Tier II/III towns, and utilizing digital verification and AI/ML to improve loan approval efficiency and risk detection.
Products & Services
Retail home loans up to INR 25 lakhs for ready-to-move-in homes, home construction, home extension, and home renovation, specifically targeting the EWS/LIG segments.
Brand Portfolio
Star HFL (formerly known as Akme Star Housing Finance Limited).
New Products/Services
Collaborative co-lending arrangements with traditional banks to provide a broader range of home loan options while leveraging the company's ground-level reach.
Market Expansion
Targeting Tier II and III towns and semi-urban/rural areas in existing and new operational geographies to capture the 'Housing for All' demand.
Market Share & Ranking
While banks currently dominate the market, HFCs like Star HFL are expected to grow at a 13% CAGR, positioning them as key players in the fragmented rural housing finance space.
Strategic Alliances
Partnerships with 10+ financial institutions for term loans and co-lending arrangements to diversify funding and enhance market reach.
External Factors
Industry Trends
The industry is shifting toward Tier 2/3 cities and adopting digital verification processes. Collaborative lending between banks and HFCs is becoming a standard to enhance customer options.
Competitive Landscape
Key competitors include traditional banks with lower costs of capital and other regional HFCs/NBFCs operating in the affordable housing space.
Competitive Moat
The moat is built on specialized credit underwriting for the 'unbanked' EWS/LIG segment in rural areas where traditional banks lack reach. This is sustainable due to the high-touch physical branch model and domain expertise in non-formal income assessment.
Macro Economic Sensitivity
Highly sensitive to interest rate cycles and rural economic health; the real estate market is projected to grow at a 7% CAGR from FY24 to FY29.
Consumer Behavior
Reverse migration from urban to rural areas has bolstered demand for housing in Star HFL's core semi-urban and rural geographies.
Geopolitical Risks
Minimal direct impact due to rural domestic focus, though global economic recovery facilitates broader sector revitalization.
Regulatory & Governance
Industry Regulations
Operations are governed by RBI and NHB guidelines, including capital adequacy norms, provisioning requirements for NPAs, and priority sector lending (PSL) standards.
Taxation Policy Impact
The company had an effective tax rate of approximately 21.7% in FY25, with a tax provision of INR 3.09 Cr on PBT of INR 14.19 Cr.
Risk Analysis
Key Uncertainties
The primary uncertainty is the Asset-Liability Mismatch (ALM) risk, which could affect solvency if short-to-medium term funding sources dry up while long-term assets remain on the books.
Geographic Concentration Risk
Concentrated in 6 Indian states, making the company vulnerable to regional economic downturns or regulatory changes in those specific areas.
Third Party Dependencies
High dependency on NHB refinance facilities and term loans from a group of 10+ banks for liquidity.
Technology Obsolescence Risk
Risk of falling behind in digital transformation; mitigated by adopting AI/ML and digital verification to improve the consumer experience.
Credit & Counterparty Risk
Credit risk is managed through a conservative framework, maintaining GNPA at 1.65% and NNPA at 1.16% as of Sep 2025, with 100% provision coverage on NPAs.
