Five-Star Business Finance (FIVESTAR) Q2 25/26 earnings summary

Executive summary

• Q2 marked stabilization after a challenging Q1, with early signs of revival and expectations for stronger performance in H2; AUM grew 18% year-over-year to ₹128,471 Mn as of Sep 30, 2025.

• Strategic tightening in sourcing, underwriting, and collections led to a temporary dip in disbursements but is expected to drive higher quality growth ahead.

• Expansion continued with 33 new branches and 769 business and collection offices added in Q2, totaling 800 branches.

• A new housing loan product was launched, targeting future growth and product diversification.

• Unaudited financial results for the quarter and half year ended September 30, 2025, were approved with an unmodified review report from auditors, confirming compliance and no material misstatements.

Financial highlights

• Q2 PAT reached ₹2,861 Mn, up 7% year-over-year; net total income for Q2FY26 increased 15% year-over-year to ₹6,265 Mn.

• Disbursements for Q2FY26 were ₹11,959 Mn, down 4% year-over-year due to stricter onboarding controls.

• Collection efficiency improved to 96.7% from 96.3% in Q1; unique customer collections stable at 95.1%.

• Liquidity on the balance sheet stood at ₹23,600 Mn as of Sep 30, 2025.

• Pre-provision operating profit (PPOP) for Q2FY26 was ₹4,329 Mn, up 14% year-over-year.

Outlook and guidance

• Management reaffirmed FY 2026 AUM growth guidance of 25% and credit cost guidance of 1.25%-1.35% of total assets.

• No change in guidance for growth, profitability, asset quality, or credit cost; improvements expected in H2.

• Focus on expanding branch network, increasing average ticket size, and deeper penetration in core geographies.

• Housing loan product expected to contribute 1%-1.5% of AUM in the first year, with further scaling planned.

• Liquidity coverage ratio remains robust at 350% as of September 30, 2025.