Non-banking financial company Five-Star Business Finance Ltd reported a 4.61% year-on-year increase in net profit to ₹299 crore in Q2 FY27, compared with ₹286 crore in the year-ago period. According to reports from CNBC TV18, the quarterly profit after tax (PAT) includes a one-time tax benefit of ₹19 crore pertaining to prior years. Net interest income (NII) rose 11.5% year-on-year to ₹691 crore from ₹619 crore, while total income increased 8% year-on-year to ₹875 crore. However, profit before tax (PBT) declined 2% to ₹375 crore. The company's return on average AUM improved by 28 basis points sequentially to 8.39%, while return on equity increased by 79 bps quarter-on-quarter to 15.25%. Net interest income grew 13% year-on-year to ₹707 crore, supported by a 7% decline in interest expenses due to lower cost of funds.
The company's assets under management (AUM) stood at ₹14,640 crore as of September 30, 2026, up 14% year-on-year and 7% sequentially. As reported by CNBC TV18, the sequential growth marked an acceleration from 4% in Q1 FY27. The AUM was distributed across 0.51 million active loans. Disbursements for Q2 FY27 stood at ₹2,078 crore, compared with ₹1,196 crore in the corresponding quarter last year, with first half FY27 disbursements at ₹3,574 crore, up 44% year-on-year. A divergence is visible between the strong top-line growth in disbursements (+74% YoY) and the modest growth in profitability (+5% YoY), suggesting that despite volume expansion, profitability per unit of equity has compressed potentially due to rising credit costs or operational expenses.
On asset quality, unique customer collection efficiency, excluding non-performing assets (NPAs), improved to 98.2% in Q2 FY27 from 97.9% in Q1 FY27. According to CNBC TV18, X-bucket collections increased to 99.4% from 99.2%, helping contain forward flows. The proportion of AUM in the current bucket rose from 83.30% to 84.78%, while the share of loans overdue by more than 30 days (30+ days past due) declined to 11.50% as of September 30, 2026, from 12.38% in the previous quarter. The slippage ratio eased to 0.68% from 0.70% in Q1 FY27, while credit cost improved to 1.80% of average AUM from 1.85% in the previous quarter. Operating expenses rose 39% year-on-year, outpacing revenue growth, which pressured profit before operating profit (PPOP) margins.
In a significant governance development, the Board of Directors approved the appointment of Mr. Shankar Subramanian as Chief Risk Officer (CRO) effective October 26, 2026. Mr. Subramanian, categorized as Senior Management Personnel, succeeds Mr. Jayaraman S, who stepped down from the position due to internal movement within the company. The appointment follows recommendations by the Nomination & Remuneration Committee. The company expanded its branch network to 875 branches across 11 states and union territories, adding 19 new branches during the quarter. The company maintains a liquidity position of ₹1,287 crore as of September 30, 2026. The cost of incremental debt during the quarter was 8.43%, while the overall cost of funds eased marginally to 8.78%. The company also highlighted a shift in its liability mix, with bank term loans constituting 61% of borrowings as of September 2026.
Shares of Five-Star Business Finance Ltd ended at ₹414.85, down by ₹33.40, or 7.45% on the BSE, according to CNBC TV18. The company availed incremental debt of ₹825 crore during the quarter at an all-inclusive cost of 8.43%. Total borrowings, including debt securities, stood at ₹7,968 crore as of September 2026, while the company held liquidity of ₹1,287 crore. The cost of funds on the overall borrowing book eased marginally to 8.78% from 8.80% in Q1 FY27. Management expects some increase in cost of funds amid the tightening rate cycle, which could affect spreads and NIM, though it expects to cushion the impact through higher yields on incremental disbursements. The financial results were subjected to a limited review by joint statutory auditors M/s Deloitte Haskins & Sells and M/s Suri and Co, who issued an unmodified opinion, confirming no material misstatements were identified during the review process.
