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Informist, Wednesday, Jan. 28, 2026

By Taniva Singha Roy

MUMBAI – Five-Star Business Finance Ltd. is expected to report a marginal on-year rise in its net profit for the December quarter due to a rise in net interest income. Sequentially, however, the bottom line is expected to see a marginal fall due to elevated credit cost, according to brokerages tracking the company. The non-banking finance company's net interest income is likely to rise both on year and sequentially.

The non-bank lender is expected to report a net profit of INR 2.81 billion for the reporting quarter, which is 2.5% higher year-on-year but 2% lower sequentially, according to the average of estimates from six brokerages. The highest estimate of net profit is INR 2.88 billion from Kotak Securities Ltd. and the lowest estimate is INR 2.76 billion from JM Financial Institutional Securities Pvt. Ltd. For the September quarter, the company had reported a net profit of INR 2.86 billion, up nearly 7% from the year-ago quarter.

The company's net interest income for the December quarter is expected to be INR 6.05 billion, up 12% on year and 2% sequentially. The highest top line estimate is INR 6.21 billion from YES Securities (India) Ltd. and the lowest is INR 5.96 billion from Motilal Oswal Financial Services Ltd.

Five-Star Business Finance's net interest margin is expected to contract on year in the December quarter due to a reduction in yield as the focus is on asset quality improvement, Sharekhan Ltd. said. "For Five-Star, loan growth and disbursements remain subdued, as the company has consciously chosen to adopt a cautious stance amid ongoing asset quality and collection trends," Motilal Oswal Financial Services Ltd. said. In Jul-Sept, the company's loan disbursement was at INR 9.41 billion, down 22% on year.

Brokerages estimate the company's net interest margin at 18.7%, down 85 basis points from a year ago. In the September quarter, the lender's net interest margin was 16.41%, down 52 bps on year.

The company's return on assets is expected to be 7.1%, while return on equity is estimated at 15.9% in December quarter, according to brokerages. In the September quarter, return on assets was 7.49%, down 87 bps on year, and return on equity was 16.91%, down 211 bps on year.

The lender's assets under management are expected to rise 16-17% on year, according to brokerages. The rise in assets under management reflects strong operational resilience and favourable policy tailwinds, Motilal Oswal said. In the September quarter, Five-Star Business Finance's assets under management were INR 128.47 billion, up 18% on year.

The company's credit cost is expected to stay elevated and is projected to rise broadly by 10 bps on quarter to nearly 1.45%. In Jul-Sept, the credit cost was 1.34%.

The non-banking finance company is expected to see improved recoveries in the third quarter.

Five-Star Business Finance will detail its earnings for Oct-Dec on Wednesday. The key factors to monitor will be the guidance on loan growth and credit cost.

All four brokerage reports available on the company with Informist have a 'buy' rating on the stock with an average target price of INR 724, which is nearly 41% higher than the closing price of INR 512.70 on Tuesday on the National Stock Exchange. The share price of the company is down over 15% since the company announced its earnings for the September quarter.

Following are the Oct-Dec earnings estimates for Five-Star Business Finance from six brokerages in descending order by the estimate of net profit in INR billion:

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Edited by Avishek Dutta

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