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Informist, Friday, Jul. 24, 2026

By Radhika Tiwari

MUMBAI – Five-Star Business Finance Ltd. is likely to post a modest growth in its net profit for the June quarter due to a stable increase in its net interest margin and assets under management, according to the brokerages tracking the company. A pick up in loan disbursements will also aid the earnings growth of the company.

The company is expected to report a net profit of INR 2.75 billion for the June quarter, up 3% on year and 2% on quarter, according to an average of estimates from five brokerages. The highest estimate for the company's net profit is INR 2.85 billion from Kotak Securities Ltd. and the lowest is INR 2.71 billion from JM Financial Institutional Securities Pvt. Ltd.

The non-bank lender is expected to report a net interest income of INR 6.38 billion, up over 10% on year and nearly 4% on quarter, according to the average of estimates. The highest estimate for the company's net interest income is INR 6.54 billion from YES Securities (India) Ltd. and the lowest is INR 6.26 billion from Motilal Oswal Financial Services Ltd.

Five-Star Business will likely benefit from sustained recovery in the microfinance segment, ICICI Securities Ltd. said. The company's assets under management will likely grow 11% on year in the June quarter. The company's ratio of cost-to-average assets under management will likely inch up to 6.7% from 6.6% a year ago, Kotak Securities said.

The non-banking finance sector is likely to post a healthy growth of 18% on year and 4% on quarter in its assets under management despite the June quarter seasonality after a robust March quarter. The increase in the assets under management will also push the pre-provision operating profit growth of the sector to 22% on year and 6% on quarter, ICICI Securities said. The growth in assets under management will translate into a 24% on-year and 6% on-quarter increase in the net interest income of the diversified non-banking finance companies, it added.

The non-banking finance sector is expected to post a strong performance for the June quarter due to improved disbursements, growth in assets under management, stable net interest margins, and moderation in credit cost, JM Financial said.

A stable asset quality signals much stronger consumption trends and credit demand in the sector despite the challenges caused by the West Asia war in the previous quarter, ICICI Securities said. Credit cost is likely to be up 7% on year and 3% on quarter after the March quarter seasonality. This will take the overall profit after tax of the sector up 30% on year and 7% on quarter, it added.

Five-Star Business' credit cost is expected to be 1.85% for the June quarter despite an improvement in early warning indicators, Kotak said. "We build in 21 bps (basis points) qoq (quarter-on-quarter) NIM (net interest margin) compression to 18.75% driven by moderation in yields, even as borrowings cost continues to trend down," the brokerage added. The company's net interest margin is likely to contract by 20 bps to 18.6%.

A 20% on-year pickup in disbursements against the 17% decline in the March quarter will stop the slowdown in the non-bank lending company's loan growth, Kotak Institutional Equities said. Investors will watch for the non-bank lender's asset quality, loan growth, and credit costs Motilal Oswal said.

Chennai-based Five-Star Business Finance offers secured business loans to micro-entrepreneurs and self-employed individuals across South India. The company will announce its financial results for the June quarter Saturday.

AT 1459 IST, Five-Star Business's shares were traded at INR 536.35 on the National Stock Exchange, up marginally from Thursday. The shares have risen 7% since the company announced its March quarter earnings on April 28.

All four research reports on the company available with Informist have a "buy" recommendation on the non-bank lender's shares. The average target price for the "buy" recommendations is INR 638, which is 19% higher than the current market price.

Following are the Apr-Jun earnings estimates for Five-Star Business Finance Ltd. from five brokerages in descending order of net profit, in INR billion:

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Edited by Pankaj Aher

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