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Informist, Saturday, Oct. 24, 2026

 

By Radhika Tiwari

 

NEW DELHI – Five-Star Business Finance Ltd. is expected to post just a marginal on-year increase in its net profit for the September quarter despite a healthy growth in net interest income, which is supported by a strong rise in loan disbursements, according to analysts tracking the company. Rising borrowing costs and bond yields, and repo rate hikes by the Reserve Bank of India, are likely to affect the company's profitability and net interest margin.

 

The company is expected to report a net profit of INR 2.87 billion for the September quarter, up 0.19% on year and nearly 6% on quarter, according to an average of estimates from five brokerages. The highest estimate for the company's net profit is INR 2.94 billion from Kotak Securities Ltd. and the lowest is INR 2.76 billion from JM Financial Institutional Securities Pvt. Ltd. Five-Star's net profit rose 1.9% on year to INR 2.71 billion in the June quarter, even as the revenue from operations was up 5.3% on year at INR 8.29 billion.

 

The non-banking lender is expected to report a net interest income of INR 7.08 billion, up over 19% on year and over 11% on quarter, according to the average of estimates. The highest estimate for the company's net interest income is INR 8.42 billion from Mirae Asset Sharekhan Ltd. and the lowest is INR 6.65 billion from Kotak Securities.

 

The non-banking finance companies are likely to post a 24% on-year increase in their net profit with Five-Star among the top picks, Motilal Oswal Financial Services Ltd. said. Five Star's loan growth and disbursements for the September quarter are likely to recover.

 

The micro, small, and medium enterprises lender's loan disbursements is likely to grow in the range of 34% to 69% on year, leading to up to a 14% on-year rise in assets under management, according to analysts. Resilient retail demand, a gradual recovery of loan against property, along with the rising share of gold loan should support MSME lenders, JM Financial said.

 

Five Star's assets under management growth will remain stable at 11% year-on-year in the September quarter, similar to the June quarter, Kotak Securities said. Cost-to-average assets under management ratio will likely remain moderate at 4.1% in line with the previous four quarters, the brokerage said. Its credit costs are likely to fall in the range of 1.8% to 2.4%, according to analysts' estimates. The company's net interest margin is likely to remain broadly stable at 19%, Kotak Securities said.

 

The macro backdrop for the NBFC sector is less supportive after the June quarter, shifting the swing factor for the September quarter earnings from demand to funding cost due to rising yields, JM Financial said. Rising bond yields point to mounting pressure on funding costs, which is expected to flow mainly through the financial year 2027-28 (Apr-Mar), the brokerage said.

 

The impact of the Insurance Regulatory and Development Authority of India's draft regulation on commission income could also put pressure on earnings in FY28, JM Financial said. The regulator has approved the draft regulations for the proposed risk-based capital framework for insurers, according to the minutes of the regulator's 133rd meeting held on Dec. 23, 2025, in Hyderabad.

 

"Outlook on asset quality, guidance on loan growth, and credit costs are expected to be closely monitored," Motilal Oswal said.

Chennai-based Five-Star Business Finance offers secured business loans to micro-entrepreneurs and self-employed individuals, like small shop owners, flower vendors, maids and masons, among others. The company will announce its financial results for the quarter ended September on Monday.

 

Friday, Five-Star Business Finance's shares closed at INR 448.40 apiece on the National Stock Exchange, down nearly 5% from the previous close. The shares of the company have fallen 17% since it announced its June quarter earnings on Jul. 25.

 

All five research reports on the company available with Informist have a "buy" recommendation on the non-bank lender's shares. The average target price for the "buy" recommendation is INR 676, which is nearly 15% higher than the current market price.

 

Following are the Jul-Sept earnings estimates for Five-Star Business Finance Ltd. from five brokerages, in descending order of net profit estimates, in INR billion:

 

Brokerages	NII	Net profit
Kotak Securities Ltd.	6.65	2.94
Motilal Oswal Financial Services Ltd.	6.67	2.93
YES Securities (India) Ltd.	6.96	2.92
Mirae Asset Sharekhan Ltd.	8.42	2.78
JM Financial Institutional Securities Pvt. Ltd.	6.68	2.76
Average	7.08	2.87

 

End

 

Edited by Biswadip Mitra

 

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