Motilal Oswal has issued a buy rating on Five Star Business Finance with a target price of ₹600, according to the research report dated June 22, 2026. The brokerage firm's recommendation comes as the company transitions from a year of portfolio repair to a phase of calibrated growth. The stock currently trades at 1.7x FY27 P/BV, with the target price premised on 1.8x March 2028E P/BV.
As reported by Motilal Oswal, Five Star Business Finance is estimated to deliver a CAGR of ~21%/12% in AUM/PAT over FY26-28E. The company is projected to achieve RoA/RoE of 6.6%/15% in FY28E. The brokerage expects the company to maintain one of the highest profitability profiles in the secured lending universe while transitioning from portfolio stabilization to balanced growth.
According to the research report, FY26 was one of the most challenging years for the company as stress originating from unsecured lending and the MFI segment spilled over into micro-LAP. Management consciously prioritized collections, portfolio quality, and borrower discipline over near-term growth during this period. With collection trends improving materially and portfolio behavior stabilizing, the company is now gradually shifting focus back to growth while maintaining disciplined underwriting approaches.
As reported by Motilal Oswal, Five Star Business Finance has exited a year of portfolio repair and entered a phase of calibrated growth. The company is supported by improving collections, stabilizing asset quality, and recovering disbursement momentum. The brokerage emphasizes that the company appears to be transitioning from portfolio stabilization toward a more balanced growth phase, underpinned by improving collection trends, moderation in fresh stress formation, and recovery in disbursement momentum.
