Five-Star Business Finance Ltd — Q1 FY27 earnings call
Summary generated by AI from the official transcript Five-Star Business Finance Ltd filed with BSE on 31 Jul 2026. Every statement cites a verbatim quote from that document — open any citation to read it. This is a record of what management said, not a recommendation. How we check these summaries
The short read
Five-Star Business Finance reported record quarterly disbursements of Rs 1,496 crore, up 23% sequentially and 16% year-on-year, with AUM at Rs 13,722 crore, a 4% sequential increase. Collection efficiency remained steady with the current book improving to 83.30% and the 30-plus bucket reducing to 12.38%, while credit cost declined sequentially to 1.85%. Management reported PAT of Rs 271 crore for the quarter and discussed cost of funds, yields, and plans for a new product alongside existing growth and asset quality trends.
Numbers mentioned
Disbursements: INR1,496 crores (Q1 FY27)
p. 3
“We clocked our historical best in disbursement with quarterly disbursements coming in at INR1,496 crores, a growth of 23% over the previous quarter and 16% over the previous year.”
Lakshmipathy D., page 3 of the filed PDF · View the filing
AUM: INR13,722 crores (Q1 FY27)
p. 3
“We ended the quarter with an AUM of INR13,722 crores, which is a sequential growth of 4% for the quarter.”
Lakshmipathy D., page 3 of the filed PDF · View the filing
Unique customer collection efficiency: 97.9% (Q1 FY27)
p. 3
“For the quarter ended June 30, 2026, we clocked a unique customer collection efficiency of 97.9% versus 98.1% last quarter”
Lakshmipathy D., page 3 of the filed PDF · View the filing
Current book: 83.30% (Q1 FY27)
p. 3
“our current book continues to improve and stood at 83.30% as compared to 82.69% as of previous quarter”
Lakshmipathy D., page 3 of the filed PDF · View the filing
30-plus book: 12.38% (Q1 FY27)
p. 3
“We also saw a good improvement in our 30-plus book, which reduced to 12.38% as compared to 12.69% in the previous quarter.”
Lakshmipathy D., page 3 of the filed PDF · View the filing
Slippages: 0.70% (Q1 FY27)
p. 3
“Our slippages remained flat at 0.70% compared to the previous quarter.”
Lakshmipathy D., page 3 of the filed PDF · View the filing
Credit cost: 1.85% (Q1 FY27)
p. 3
“our credit cost dropped sequentially to 1.85% for Q1 financial year '27 from 1.88% for the Q4 financial year '26”
Lakshmipathy D., page 3 of the filed PDF · View the filing
All-inclusive cost of borrowing: 8.33% (Q1 FY27)
p. 3
“our all-inclusive cost was at 8.33% despite not so favourable liquidity conditions”
Lakshmipathy D., page 3 of the filed PDF · View the filing
Cost of funds on book: 8.80% (Q1 FY27)
p. 3
“This has also helped bring down our cost of fund on the book from 8.95% for Q4 to 8.80% for the Q1 this year.”
Lakshmipathy D., page 3 of the filed PDF · View the filing
Active loan customers: 500,000 (as of 30th June)
p. 4
“one other milestone that we crossed is to achieve 500,000 active loan customers as on 30th June, which is a very significant milestone in the journey of the company”
Srikanth Gopalakrishnan, page 4 of the filed PDF · View the filing
Branch count: 856 branches (as of June)
p. 4
“We added about 12 branches during this quarter, largely coming in from the state of Maharashtra and ended June with about 856 branches”
Srikanth Gopalakrishnan, page 4 of the filed PDF · View the filing
ROA: 8.11% (Q1 FY27)
p. 4
“We had achieved an ROA of about 8.11% for the current quarter, ROE of close to 14.5%.”
Srikanth Gopalakrishnan, page 4 of the filed PDF · View the filing
PAT: INR271 crores (Q1 FY27)
p. 4
“we ended the quarter with about INR271 crores of PAT”
Srikanth Gopalakrishnan, page 4 of the filed PDF · View the filing
Net worth: INR7,653 crores (as of 30th June)
p. 4
“our net worth as of 30th June stands at about INR7,653 crores”
Srikanth Gopalakrishnan, page 4 of the filed PDF · View the filing
June disbursements: INR670 crores (June 2026)
p. 22
“So June, we did about INR670 crores, Renish.”
Srikanth Gopalakrishnan, page 22 of the filed PDF · View the filing
Write-offs: INR60 crores (Q1 FY27)
p. 13
“We did about INR60 crores of write-offs in the first quarter.”
Srikanth Gopalakrishnan, page 13 of the filed PDF · View the filing
Recovery on write-offs: INR35 crores (Q1 FY27)
p. 6
“we clocked a recovery of about INR 35 crores as compared to about INR 26 -27 crores of last quarter”
Srikanth Gopalakrishnan, page 6 of the filed PDF · View the filing
What management said it would do
A record of statements made on the call, in the words management used. Parakho does not forecast, endorse or assess them, and their presence here is not a view on whether they will happen.
Cost to assets (opex ratio) — 5.75% to 6% this year, 5.25% to 5.5% steady state · FY28 onwards
stated firmly by Srikanth Gopalakrishnan
p. 5
“I think we will stay at around 5.75% to 6% for this year. But in a steady state, this number should drop somewhere close to about 5.25% to 5.5%.”
Srikanth Gopalakrishnan, page 5 of the filed PDF · View the filing
Asset yield — around 22.25% · next couple of quarters
stated conditionally by Srikanth Gopalakrishnan
p. 5
“this number should largely settle around the 22.25% is our thought. So maybe you will see this contraction of another 10-15 basis points for the next couple of quarters, should settle somewhere around the 22.25% levels.”
Srikanth Gopalakrishnan, page 5 of the filed PDF · View the filing
Cost of borrowing (incremental) — 8.5% level · for the year
stated conditionally by Srikanth Gopalakrishnan
p. 9
“my sense is, I think our incremental cost of borrowing should be somewhere around the 8.5% level, which means we still have another 20-30 basis points of compression that can come in the borrowings over the period.”
Srikanth Gopalakrishnan, page 9 of the filed PDF · View the filing
Credit cost — 1.7% to 1.9% · FY27
stated firmly by Lakshmipathy D.
p. 8
“The guidance what we have given for the credit cost for this financial year, the credit cost will be in somewhere between 1.7% to 1.9%.”
Lakshmipathy D., page 8 of the filed PDF · View the filing
Credit cost — 1.6% to 1.7% · FY28 onwards
stated conditionally by Srikanth Gopalakrishnan
p. 14
“From FY28 onwards, it won't be at 1.7%, 1.9% levels, which will -- even the highest range will be 1.7%, possibly around 1.6% to 1.7%.”
Srikanth Gopalakrishnan, page 14 of the filed PDF · View the filing
Gross NPA — sub 3%
stated firmly by Srikanth Gopalakrishnan
p. 8
“we have also clearly guided you on the gross NPAs, which will fall to sub 3%”
Srikanth Gopalakrishnan, page 8 of the filed PDF · View the filing
Current book — 85% · by end of this year
stated firmly by Srikanth Gopalakrishnan
p. 14
“I think we expect our current book to be about 85% by the end of this year.”
Srikanth Gopalakrishnan, page 14 of the filed PDF · View the filing
30-plus book — less than 12%
stated firmly by Srikanth Gopalakrishnan
p. 14
“you will also start seeing the 30-plus come down less than 12%”
Srikanth Gopalakrishnan, page 14 of the filed PDF · View the filing
Overall ECL coverage — 1.75% to 1.8%
stated firmly by Srikanth Gopalakrishnan
p. 14
“we will endeavor to maintain an overall coverage of 1.75% to 1.8% on the book Rajiv”
Srikanth Gopalakrishnan, page 14 of the filed PDF · View the filing
Write-offs — INR225 crores to INR250 crores full year · FY27
stated firmly by Srikanth Gopalakrishnan
p. 13
“We should be seeing write-offs for the full year at somewhere around INR225 crores to INR250 crores, which is largely the run rate that we did in the first quarter.”
Srikanth Gopalakrishnan, page 13 of the filed PDF · View the filing
Expense growth — 20% to 21% · FY27 vs last year
stated firmly by Srikanth Gopalakrishnan
p. 16
“we are expecting somewhere around 20% to 21% growth compared to last year's numbers”
Srikanth Gopalakrishnan, page 16 of the filed PDF · View the filing
Debt to equity — 2 · 6 to 8 quarters
stated conditionally by Srikanth Gopalakrishnan
p. 17
“I would probably think definitely not before another 8 quarters, 6-8 quarters.”
Srikanth Gopalakrishnan, page 17 of the filed PDF · View the filing
Steady-state ROE — 18% to 20%
stated as an aspiration by Srikanth Gopalakrishnan
p. 20
“if we are able to get to the 3x leverage, we are talking somewhere between 18% to 20% as the ROE. So that's the endeavor that we are working on.”
Srikanth Gopalakrishnan, page 20 of the filed PDF · View the filing
Steady-state ROA — 6% to 6.5%
stated as an aspiration by Srikanth Gopalakrishnan
p. 20
“the guidance that we used to give would be a steady-state ROA of somewhere around 6% to 6.5%”
Srikanth Gopalakrishnan, page 20 of the filed PDF · View the filing
Spread — current levels · next few quarters
stated conditionally by Srikanth Gopalakrishnan
p. 11
“Spread should largely remain flat to current levels for the next few quarters, assuming no policy actions.”
Srikanth Gopalakrishnan, page 11 of the filed PDF · View the filing
New product launch — next 3 to 6 months
stated firmly by Lakshmipathy D.
p. 11
“We are very clearly thinking 2-3 products, out of that one product which we wanted to go first, maybe in next 3 months or 6 months.”
Lakshmipathy D., page 11 of the filed PDF · View the filing
Repayment rate — 27%-28%
stated as an aspiration by Srikanth Gopalakrishnan
p. 12
“I think while the number currently is at about 30% or closer to 30% Raghav, this number should largely trend somewhere around 27%- 28% in the normal sense.”
Srikanth Gopalakrishnan, page 12 of the filed PDF · View the filing
Monthly disbursement run rate — INR600 crores to INR670 crores · rest of the year
stated conditionally by Srikanth Gopalakrishnan
p. 22
“On an average, yes.”
Srikanth Gopalakrishnan, page 22 of the filed PDF · View the filing
Q&A highlights
Management's answers to analyst questions, in Parakho's words rather than a transcript. Each row names who answered and carries the verbatim quote it was drawn from.
Management said opex will stay elevated this year due to competitive compensation needs, with operating leverage emerging from next year, and steady-state cost-to-assets around 5.25-5.5% from FY28.
Answered by Srikanth Gopalakrishnan
Asked by Renish: What is the new steady-state cost-to-asset ratio and when will operating leverage kick in?
p. 5
“So the opex for this year will largely stay flat as compared to last year. But from next year onwards, certainly you will see operating leverage starting to kick in.”
Srikanth Gopalakrishnan, page 5 of the filed PDF · View the filing
Management said no ARC sales occur and credit cost is shown gross, with recoveries booked as other income rather than netted off.
Answered by Srikanth Gopalakrishnan
Asked by Viral Shah: Does the company resort to ARC sales, and how is credit cost calculated relative to recoveries?
p. 6
“No. We do not resort to any ARC sale. The second point is our credit cost is also reflected at gross level, which means we are not netting off the recoveries that we are getting on write-off loans on our credit costs.”
Srikanth Gopalakrishnan, page 6 of the filed PDF · View the filing
Management expects slippages, credit cost, and NPLs to trend down over the coming quarters as collections continue to strengthen.
Answered by Lakshmipathy D.
Asked by Abhijit Tibrewal: How many more quarters until slippages normalize, given the earlier microfinance overlap?
p. 8
“on the asset quality, I said that coming quarters, especially in September, December and March for this financial year, you see all these 3 numbers trending down, slippages, credit cost and NPLs.”
Lakshmipathy D., page 8 of the filed PDF · View the filing
Management said the overlap with microfinance has genuinely reduced due to guardrails, and gold loan growth has also slowed with price corrections, not masking underlying trends.
Answered by Srikanth Gopalakrishnan
Asked by Chandrasekhar Sridhar: Is the improvement in microfinance overlap or gold loan trends masking underlying weakness in customer cash flows?
p. 10
“I think the number -- while we have not done it for this quarter, but it trended down from about 20%-21% to about 16%-17%.”
Srikanth Gopalakrishnan, page 10 of the filed PDF · View the filing
Management said it will maintain overall book coverage of 1.75-1.8% regardless of which stage the coverage sits in.
Answered by Srikanth Gopalakrishnan
Asked by Rajiv Mehta: Does the credit cost guidance imply building back Stage 1/2 provision coverage?
p. 14
“We will endeavor to maintain an overall coverage of 1.75% to 1.8% on the book Rajiv, whether it's a combination of pushing up the Stage 1, Stage 2 coverage or pushing up the Stage 3 coverage”
Srikanth Gopalakrishnan, page 14 of the filed PDF · View the filing
Management clarified the cost increase relates to salary realignment and incentives at branch level, not ESOPs, since branch staff find ESOPs unattractive.
Answered by Srikanth Gopalakrishnan
Asked by Kunal Shah: Is the disbursement growth driven by employee incentives or ESOPs?
p. 15
“So this will be more like realigning, revising their salaries, giving them slightly better incentives for the performance, which will push up the cost. So nothing to do with ESOPs.”
Srikanth Gopalakrishnan, page 15 of the filed PDF · View the filing
Management estimated it would take about 6-8 quarters given growth plans and annual net worth accretion from profits.
Answered by Srikanth Gopalakrishnan
Asked by Divyansh Gupta: When can the company realistically reach a debt-to-equity ratio of 2?
p. 17
“I would probably think definitely not before another 8 quarters, 6-8 quarters.”
Srikanth Gopalakrishnan, page 17 of the filed PDF · View the filing
Management said the intent is to price cost increases back through provisions and credit cost improvements rather than raising lending rates.
Answered by Lakshmipathy D.
Asked by Darshan Deora: Given the more favorable regulatory environment, will lending yields be raised back up to improve ROE faster?
p. 21
“I think that will be priced back in our credit cost and slippage ratio and NPLs trending down. So we want that to be priced back in provision rather than in increasing the lending rate.”
Lakshmipathy D., page 21 of the filed PDF · View the filing
Risks flagged
Rising energy costs that could further increase
p. 7
“One is on the energy cost, which has gone up, which may even go up.”
Lakshmipathy D., page 7 of the filed PDF · View the filing
Potential regulatory action on liquidity/price that could affect borrowing costs
p. 7
“Second is on the liquidity front, what the regulator is going to take a call on the price hike.”
Lakshmipathy D., page 7 of the filed PDF · View the filing
A repo rate increase could push up cost of borrowings
p. 9
“So if there is a repo rate increase, then that will definitely impact the cost of borrowings in a negative manner.”
Srikanth Gopalakrishnan, page 9 of the filed PDF · View the filing
Customer overleveraging risk that lenders cannot fully control
p. 10
“We can't control the customers as long as the lenders are obedient enough or disciplined enough to have the guardrails what their associations have been put in place.”
Lakshmipathy D., page 10 of the filed PDF · View the filing
Continued flows and slippages from the 61-90 day bucket into write-offs
p. 13
“there is also a good amount of portfolio in the 61- to 90-day bucket. There will be slippages.”
Srikanth Gopalakrishnan, page 13 of the filed PDF · View the filing
Generated by claude-sonnet-5. Source: the transcript as filed with BSE. We link to the exchange's copy; we do not host transcripts. Parakho is a data and screening tool, not an investment adviser — nothing here is a recommendation to buy, sell or hold.