Motilal Oswal has issued a buy rating on Five Star Business Finance with a target price of ₹590 in its research report dated January 30, 2026. According to the brokerage report, the stock currently trades at 1.5x FY27E P/BV and is expected to deliver strong growth metrics over the forecast period.
The company's Q3FY26 PAT grew approximately 1% year-on-year to ₹2.8 billion, which was in line with expectations. As reported by Motilal Oswal, Net Interest Income (NII) grew around 12% YoY to ₹6.1 billion, also meeting analyst estimates. Other income rose 33% YoY to ₹264 million, though this was below the brokerage's estimate of ₹370 million, primarily due to a decline in treasury income.
Latest financial data shows Five Star Business Finance maintaining strong growth momentum with standalone net sales reaching ₹815.07 crore in December 2025, representing a 12.06% year-on-year increase from ₹799.44 crore in September 2025. The company has demonstrated consistent growth with net sales growing 13.87% YoY in September 2025 and 18.09% YoY in June 2025, indicating robust operational performance across quarters.
Operating expenses increased 21% YoY to ₹2.1 billion, which was in line with projections. The company made provisions of approximately ₹21 million towards employee benefits under new labor codes during the quarter. Pre-Provision Operating Profit (PPoP) rose around 10% YoY to ₹4.3 billion, meeting expectations, while credit costs stood at ₹571 million.
According to Motilal Oswal's analysis, the company is estimated to achieve a CAGR of approximately 21%/15% in AUM/PAT over FY26-28E with RoA/RoE of 6.9%/16% in FY28E. The brokerage has revised the target price to ₹590 based on 1.8x December 2027E Book Value. Annualized credit costs stood at approximately 1.5% compared to 1.35% in the previous quarter and 0.7% in the previous year.
