Five-Star Business Finance Ltd (BOM:543663) Q4 2026 Earnings Call Highlights: Strong Collection ...

This article first appeared on GuruFocus .

Release Date: April 29, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript .

Positive Points

• Five-Star Business Finance Ltd ( BOM:543663 ) reported a unique customer collection efficiency of 98.1%, one of the best in its history.

• The company's disbursement for the quarter increased by 24% over the previous quarter, indicating a refocus on distribution and portfolio growth.

• Five-Star Business Finance Ltd ( BOM:543663 ) secured a significant funding of 100 million from the Asian Development Bank, reinforcing lender confidence.

• The company achieved a full-year PAT growth of 2% despite challenging conditions, with a PAT of 1,099 crores.

• Return on average AEM and return on equity remain healthy at 8.68% and 16% respectively, showcasing strong financial performance.

Negative Points

• The company faced asset quality headwinds, with an increase in DPDs and NPAs due to MFI overlap.

• There was a senior management exit during the year, although the company claims it had no impact on performance.

• The cost of funds, although reduced, remains relatively high at 8.95% for the quarter.

• The company's PAT for the quarter was 3% lower compared to the previous quarter due to higher personal expenses.

• Credit cost increased slightly to 1.88% of average AEM, indicating ongoing challenges in managing credit risk.

Q & A Highlights

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Q: How is April trending in terms of collections and disbursement run rate? A: April is a seasonally weak quarter, but we don't expect material deterioration. Collections are in line with typical April trends, and disbursements are looking up. We have split business and collections operations, which should support strong disbursement growth. (Unidentified_4)

Q: What credit cost are you projecting for FY27, given the current trends? A: We expect credit costs to improve from the current 1.88% to around 1.7% to 1.75% for FY27. This is based on the current trajectory of credit costs and slippage rates. (Unidentified_4)

Q: What is the steady-state credit cost you anticipate in the future? A: We anticipate a steady-state credit cost of 1.5% to 1.6% over the next few years. This reflects our understanding of the customer segment and the need to balance growth with credit cost management. (Unidentified_4)

Q: Are there any disruptions in the market affecting your self-employed customer segment? A: We have not observed any major impact from macroeconomic or geopolitical scenarios on our customer segment. We continue to monitor the situation closely, but repayments are currently in line with expectations. (Unidentified_4)