Five-Star Business Finance reports stable Q2 FY26 performance, anticipates stronger growth

Five-Star Business Finance Limited reported a stable Q2 FY26, with profit after tax (PAT) reaching ₹286 crores, a 7% increase from the previous quarter. Return on assets (ROA) improved from 7.24% in Q1 to 7.49% in Q2, while return on equity (ROE) increased from 16.57% to 16.91%. The company disbursed ₹1,196 crores in loans during Q2, a slight decrease from ₹1,290 crores in Q1, attributed to stricter customer onboarding controls.

Collection efficiency saw a marginal improvement, rising from 96.3% in Q1 to 96.7% in Q2, with unique customer collections remaining stable at 95.1%. The cost of incremental debt decreased to 8.56%, contributing to a drop in the overall cost of funds by 27 basis points. The company maintained robust liquidity of ₹2,360 crores on its balance sheet. Credit costs for Q2 stood at 1.34%, a marginal increase from Q1, but within the revised guidance of 1.25% to 1.35% for FY26.

The company expanded its infrastructure by adding 33 branches and 769 business and collection officers in Q2. Five-Star also commenced its housing loan product in October 2025, targeting an average ticket size of ₹6-8 lakhs with expected yields of 16%-18%. This new offering is projected to contribute 1%-1.5% to the total AUM for the current fiscal year.