Five-Star Business Finance (FIVESTAR) Q3 25/26 earnings summary

Executive summary

• Focused on stabilizing collections and asset quality amid ongoing stress in small ticket loans, using a three-step approach: understanding the crisis, fixing problems, and preparing for growth acceleration.

• AUM grew 16% year-over-year to ₹129,641 Mn as of Dec 31, 2025, with 835 branches and 0.49 Mn active loans.

• Loan disbursements for Q3FY26 were ₹9,764 Mn, up 4% year-over-year, with PAT for Q3FY26 at ₹2,770 Mn, a 1% increase year-over-year.

• Unaudited financial results for the quarter and nine months ended December 31, 2025, were approved, with a clean review report from auditors and no qualifications or modifications noted.

• Management remains cautious, prioritizing long-term credit culture over short-term cleanups, and expects to accelerate growth after confirming sustained improvements.

Financial highlights

• PAT for Q3 FY26 was INR 277 crore, down 3% sequentially due to a one-off in the previous quarter and labor code impact, but up from INR 274 crore year-over-year.

• Net total income for Q3FY26 rose 13% to ₹6,337 Mn compared to Q3FY25.

• For the nine months ended December 2025, PAT rose 5% year-over-year to INR 830 crore.

• Disbursements for Q3 were INR 976 crore, 18% lower sequentially, reflecting a deliberate slowdown to focus on collections.

• Cost to income ratio (including credit cost) increased to 41.93% from 34.87% in Q3FY25.

Outlook and guidance

• No specific growth guidance provided; management will revisit growth targets after Q4, once collection strategies are fully in place and asset quality stabilizes.

• Focus on expanding branch network and increasing average ticket size to drive future growth.

• The company recognized an incremental provision of ₹209.40 lakh for employee benefits due to the new Labour Codes, with further impact to be reassessed based on final rules and industry practices.