Chennai-based non-banking finance company (NBFC) Five-Star Business Finance Ltd reported a 2% year-on-year increase in net profit to ₹271 crore for the first quarter ended June 30, 2026, compared with ₹266 crore in the corresponding quarter of the previous fiscal.
The company’s Net Interest Margin (NIM) remained largely stable at 19.97%, marginally lower than 19.99% recorded in the year-ago period.
Record disbursements drive growth
The company achieved its highest-ever quarterly disbursements of ₹1,496 crore during Q1 FY27, registering a 23% sequential growth and 16% year-on-year increase. The strong lending momentum helped Assets Under Management (AUM) rise to ₹13,722 crore, up 10% year-on-year and 4% quarter-on-quarter.
Five-Star said its AUM is spread across nearly 0.50 million active loans, reflecting the company’s focus on small business and secured lending.
Collection efficiency remains strong
The lender maintained healthy collection performance during the quarter, with unique customer collection efficiency (excluding NPAs) at 97.9%, compared with 98.1% in the previous quarter.
Its X-bucket collections stood at 99.2%, while the proportion of current bucket AUM improved to 83.30% from 82.69% in Q4 FY26, indicating better repayment behaviour.
The slippage ratio remained steady at 0.70%, while Gross Stage 3 assets edged up slightly to 3.46% from 3.37% in the previous quarter. However, the company expects headline NPA levels to begin moderating over the next few quarters as fresh slippages ease.
Credit cost also improved marginally to 1.85% of average AUM, compared with 1.88% in Q4 FY26.
Funding costs decline
During the quarter, Five-Star raised ₹450 crore of incremental debt at an all-inclusive cost of 8.33%. Its overall cost of funds declined to 8.80% from 8.95% in the preceding quarter, helping preserve lending spreads despite softer yields.
The company carried Expected Credit Loss (ECL) provisions of ₹244 crore, equivalent to 1.78% of AUM, while Stage 3 provisions stood at ₹191 crore, resulting in a 40.14% provision coverage ratio on Stage 3 assets.
Outlook remains positive
Five-Star Business Finance Ltd Chairman & Managing Director Lakshmipathy Deenadayalan said the June quarter marked a strong start to FY27, supported by robust disbursement growth and improving collection metrics.
He said the company recorded its highest-ever quarterly disbursements of ₹1,496 crore, while collection indicators continued to strengthen, reinforcing confidence in the company’s growth trajectory.
“We are moving in the direction of ‘Onwards and Upwards’,” he said, adding that the combination of improving asset quality, lower funding costs and accelerating portfolio growth gives the company confidence of comfortably achieving its full-year growth guidance.