Motilal Oswal's research report onFive Star Business Finance
We interacted with the senior management team of Five-Star Finance, represented by Mr. Srikanth G, Joint MD and CFO, to discuss the company’s future business trajectory and the strategic roadmap. Growth recovery gaining traction as operating headwinds recede Five-Star delivered strong growth in the initial post-IPO period before regulatory tightening, the Karnataka ordinance and borrower overleveraging weighed on business momentum. While the Karnataka ordinance had limited bearing on the company’s portfolio, the broader overleverage cycle spilled over into its secured customer base, weakening collections and prompting a shift in focus from growth to collections and portfolio quality. However, operating trends have improved over the past 3-6 months, with visible signs of recovery as slippages moderated and disbursement momentum improved.
The stock currently trades at 1.9x FY27E P/BV. We estimate Five-Star to deliver AUM/PAT CAGR of ~25%/15% over FY26-28E while generating RoA/RoE of 6.6%/16% in FY28E. We reiterate our BUY rating with a TP of INR685, based on 2x Mar’28E P/BV.
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Five Star Business Finance - 1509026 - moti
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