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What is the story about?
Non-banking financial company Five-Star Business Finance Ltd on Monday (October 26) reported a 4.61% year-on-year increase in net profit to ₹299 crore in Q2 FY27, compared with ₹286 crore in the year-ago period.
The quarterly profit after tax (PAT) includes a one-time tax benefit of ₹19 crore pertaining to prior years. Net interest income (NII) rose 11.5% year-on-year to ₹691 crore from ₹619 crore.
The company’s total income increased 8% year-on-year to ₹875 crore, while profit before tax (PBT) declined 2% to ₹375 crore.
The company’s return on assets under management (RoAUM) improved by 28 basis points (bps) sequentially to 8.39%, while return on equity (RoE) increased by 79 bps quarter-on-quarter to 15.25%.
ALSO READ | Five Star Business approves ₹4,000-crore fundraise via NCDs on private placement basis
However, RoAUM declined 59 bps year-on-year, and RoE was down 166 bps over the same period. Net interest margin (NIM) remained broadly stable at 19.87%, compared with 19.97% in Q1 FY27, and was 16 bps higher year-on-year.
AUM grows 14% to ₹14,640 crore
Five-Star Business Finance’s assets under management (AUM) stood at ₹14,640 crore as of September 30, 2026, up 14% year-on-year and 7% sequentially. The sequential growth marked an acceleration from 4% in Q1 FY27. The AUM was distributed across 0.51 million active loans.
The company disbursed ₹2,078 crore in Q2 FY27, compared with ₹1,196 crore in the corresponding quarter last year. Disbursements for the first half of FY27 stood at ₹3,574 crore, up 44% year-on-year.
The company said it would continue to focus on restoring its growth momentum and expects to exceed its growth guidance for the current year comfortably, supported by strong collections, controlled slippages and credit costs, and no material impact from the macroeconomic scenario.
Collection Efficiency Improves
On asset quality, unique customer collection efficiency, excluding non-performing assets (NPAs), improved to 98.2% in Q2 FY27 from 97.9% in Q1 FY27. X-bucket collections increased to 99.4% from 99.2%, helping contain forward flows.
ALSO READ | Five Star Business Finance Q1 net profit up 2% as disbursements hit record ₹1,496 crore
Consequently, the proportion of AUM in the current bucket rose from 83.30% to 84.78%, while the share of loans overdue by more than 30 days (30+ days past due, or DPD) declined to 11.50% as of September 30, 2026, from 12.38% in the previous quarter.
The slippage ratio, defined as the increase in NPAs plus write-offs as a percentage of opening standard AUM, eased to 0.68% from 0.70% in Q1 FY27. Gross Stage 3 assets remained broadly stable at 3.48%, despite macroeconomic headwinds across the industry.
Credit cost improved to 1.80% of average AUM from 1.85% in the previous quarter. The company expects credit slippages and credit costs to remain broadly flat for the rest of the year.
ECL Provision at ₹253 crore
The expected credit loss (ECL) provision on the books stood at ₹253 crore, excluding ECL maintained on inter-corporate deposits, equivalent to 1.73% of overall AUM. Stage 3 provisions stood at ₹201 crore, resulting in a provision coverage ratio of 39.49% on Stage 3 assets.
Borrowings at ₹7,968 Crore
Total borrowings, including debt securities, stood at ₹7,968 crore as of September 2026, while the company held liquidity of ₹1,287 crore.
Five-Star Business Finance availed incremental debt of ₹825 crore during the quarter at an all-inclusive cost of 8.43%. The cost of funds on the overall borrowing book eased marginally to 8.78% from 8.80% in Q1 FY27.
ALSO READ | Five Star Business Finance shares jump 12% post Q2 results; profit up 7%
The company expects some increase in its cost of funds, both on incremental borrowings and across the overall book, amid the tightening rate cycle. This could affect spreads and NIM. However, it expects to cushion the impact through higher yields on incremental disbursements, with the increases made effective from October 2026.
Shares of Five-Star Business Finance Ltd ended at ₹414.85, down by ₹33.40, or 7.45%, on the BSE.
The quarterly profit after tax (PAT) includes a one-time tax benefit of ₹19 crore pertaining to prior years. Net interest income (NII) rose 11.5% year-on-year to ₹691 crore from ₹619 crore.
The company’s total income increased 8% year-on-year to ₹875 crore, while profit before tax (PBT) declined 2% to ₹375 crore.
The company’s return on assets under management (RoAUM) improved by 28 basis points (bps) sequentially to 8.39%, while return on equity (RoE) increased by 79 bps quarter-on-quarter to 15.25%.
ALSO READ | Five Star Business approves ₹4,000-crore fundraise via NCDs on private placement basis
However, RoAUM declined 59 bps year-on-year, and RoE was down 166 bps over the same period. Net interest margin (NIM) remained broadly stable at 19.87%, compared with 19.97% in Q1 FY27, and was 16 bps higher year-on-year.
AUM grows 14% to ₹14,640 crore
Five-Star Business Finance’s assets under management (AUM) stood at ₹14,640 crore as of September 30, 2026, up 14% year-on-year and 7% sequentially. The sequential growth marked an acceleration from 4% in Q1 FY27. The AUM was distributed across 0.51 million active loans.
The company disbursed ₹2,078 crore in Q2 FY27, compared with ₹1,196 crore in the corresponding quarter last year. Disbursements for the first half of FY27 stood at ₹3,574 crore, up 44% year-on-year.
The company said it would continue to focus on restoring its growth momentum and expects to exceed its growth guidance for the current year comfortably, supported by strong collections, controlled slippages and credit costs, and no material impact from the macroeconomic scenario.
Collection Efficiency Improves
On asset quality, unique customer collection efficiency, excluding non-performing assets (NPAs), improved to 98.2% in Q2 FY27 from 97.9% in Q1 FY27. X-bucket collections increased to 99.4% from 99.2%, helping contain forward flows.
ALSO READ | Five Star Business Finance Q1 net profit up 2% as disbursements hit record ₹1,496 crore
Consequently, the proportion of AUM in the current bucket rose from 83.30% to 84.78%, while the share of loans overdue by more than 30 days (30+ days past due, or DPD) declined to 11.50% as of September 30, 2026, from 12.38% in the previous quarter.
The slippage ratio, defined as the increase in NPAs plus write-offs as a percentage of opening standard AUM, eased to 0.68% from 0.70% in Q1 FY27. Gross Stage 3 assets remained broadly stable at 3.48%, despite macroeconomic headwinds across the industry.
Credit cost improved to 1.80% of average AUM from 1.85% in the previous quarter. The company expects credit slippages and credit costs to remain broadly flat for the rest of the year.
ECL Provision at ₹253 crore
The expected credit loss (ECL) provision on the books stood at ₹253 crore, excluding ECL maintained on inter-corporate deposits, equivalent to 1.73% of overall AUM. Stage 3 provisions stood at ₹201 crore, resulting in a provision coverage ratio of 39.49% on Stage 3 assets.
Borrowings at ₹7,968 Crore
Total borrowings, including debt securities, stood at ₹7,968 crore as of September 2026, while the company held liquidity of ₹1,287 crore.
Five-Star Business Finance availed incremental debt of ₹825 crore during the quarter at an all-inclusive cost of 8.43%. The cost of funds on the overall borrowing book eased marginally to 8.78% from 8.80% in Q1 FY27.
ALSO READ | Five Star Business Finance shares jump 12% post Q2 results; profit up 7%
The company expects some increase in its cost of funds, both on incremental borrowings and across the overall book, amid the tightening rate cycle. This could affect spreads and NIM. However, it expects to cushion the impact through higher yields on incremental disbursements, with the increases made effective from October 2026.
Shares of Five-Star Business Finance Ltd ended at ₹414.85, down by ₹33.40, or 7.45%, on the BSE.
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