Five-Star Business Finance (FIVESTAR) Q2 24/25 earnings summary

Executive summary

• Achieved 32% year-over-year AUM growth to ₹109,272 Mn as of Sep 30, 2024, with 113 new branches opened in the quarter and 430,405 live accounts.

• Loan disbursements for Q2FY25 reached ₹12,507 Mn, up 4% year-on-year but down 5% sequentially, reflecting a conscious slowdown.

• Profit after tax for Q2FY25 was ₹2,679 Mn, a 34% increase year-over-year; H1FY25 PAT at ₹5,195 Mn, up 36%.

• Board reduced growth guidance to 25% for FY25, citing regulatory environment and over-leverage concerns.

• Lending rates on incremental disbursements to be cut by 200 bps from November 2024.

Financial highlights

• Total income for Q2 FY25 was ₹70,584.12 lakhs, up from ₹52,236.50 lakhs in Q2 FY24.

• PAT for the quarter was ₹2,679 Mn, up 34% year-on-year and 6% sequentially.

• Net worth stands at over ₹57,000 Mn.

• Gross stage 3 assets at 1.47%, net stage 3 assets at 0.71% as of Sep 30, 2024; collection efficiency at 98.4%.

• Cost of funds stable at 9.65%; incremental borrowing cost at 9.52%.

Outlook and guidance

• FY25 AUM growth guidance set at 25%, with future growth to be revisited based on market conditions.

• Long-term steady state spread targeted at 12% and ROA at 6%.

• Expectation of sharper yield compression in FY26-FY27 as lower lending rates flow through the portfolio.

• Focus on expanding branch network and increasing field officer strength to drive growth.

• Large MSME credit gap in India presents significant long-term growth opportunities.