This article first appeared on GuruFocus .
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Portfolio Quality:Current portfolio proportion increased from 81.67% in September to 81.77% in December.
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Collection Efficiency:Unique customer collection efficiency stable at 95.1%; overall collection efficiency at 96.6%.
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Unique Customer Collection Efficiency (Excluding NPA):Increased from 96.5% in Q2 to 97.26% in Q3.
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Current Book Collection Efficiency:Increased from 98.5% in Q2 to 99.01% in Q3.
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Stage 3/NPA Recoveries:Amounted to 23 crores in Q3.
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Credit Cost:Increased marginally from 1.34% in Q2 to 1.44% in Q3.
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Branch and Collection Officer Expansion:Added 35 branches and 678 business and collection officers in Q3; total collection officers increased to 2,452.
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Disbursements:Stood at 976 crores, 18% lower compared to the previous quarter.
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Incremental Debt:Availment of 460 crores at a cost of 8.19%.
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Cost of Funds:Dropped from 9.63% to 9.12% year-over-year.
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Liquidity Buffer:Robust liquidity of INR 2,276 crores.
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Net Profit (PAT):277 crores, 3% lower compared to the previous quarter.
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Return on Assets (ROA):7%.
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Return on Equity (ROE):15.8%.
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Net Worth:7,083 crores as of December.
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Warning! GuruFocus has detected 2 Warning Sign with BOM:543663.
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Release Date: January 29, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Five-Star Business Finance Ltd ( BOM:543663 ) has seen a marginal improvement in portfolio quality, with the current proportion of the portfolio increasing from 81.67% in September to 81.77% in December.
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The company reported stable collection efficiency, with unique customer collection efficiency at 95.1% and overall collection efficiency at 96.6%.
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The cost of incremental debt has decreased slightly to 8.19%, which is lower than the previous quarter, indicating better financial management.
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Five-Star Business Finance Ltd ( BOM:543663 ) has maintained a robust liquidity position with INR 2,276 crores on the balance sheet.
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The company has signed a loan agreement with the Asian Development Bank for a $100 million sanction limit, enhancing its financial flexibility.
Negative Points
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Slippages in Stage 3 or NPA remain slightly elevated, indicating persistent stress among some borrowers.
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Credit costs have increased marginally from 1.34% in Q2 to 1.44% in Q3, reflecting ongoing challenges in managing loan quality.
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Disbursements during the quarter were 18% lower compared to the previous quarter, indicating a slowdown in growth.
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The company's ROA has decreased from 8% to 7%, and ROE has dropped to 15.8%, showing a decline in profitability.
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The company is facing a behavioral crisis among borrowers, which is prolonging the recovery process and impacting overall performance.
Q & A Highlights
Q: Can you provide the unique collection efficiency numbers for the current customers, excluding NPA customers, over the last three quarters? A: The unique customer collection efficiency, excluding the NPA book, increased from 96.5% to 97.3% during this quarter. We will provide the Q1 numbers shortly. - Srikanth Gopalakrishnan, Joint Managing Director & CFO
Q: What is the outlook on growth, considering the recent stabilization in asset quality? A: We will provide growth guidance post-Q4 results. Our focus is on setting up collections before accelerating disbursements. Once our strategy is in place, we will discuss growth numbers. - Srikanth Gopalakrishnan, Joint Managing Director & CFO
Q: How do you plan to address the behavioral crisis among borrowers? A: The crisis has shifted from over-leverage to behavioral issues. We are focusing on educating customers about credit culture and maintaining a prudent approach without resorting to large write-offs. - Lakshmipathy Deenadayalan, Chairman and Managing Director
Q: What steps are being taken to fix the current issues beyond setting up a collection vertical? A: We have implemented underwriting steps and are building a full-fledged collection vertical. Further details can be discussed offline. - Lakshmipathy Deenadayalan, Chairman and Managing Director
Q: How are the collection trends in January compared to December? A: January collections are holding up well despite holidays. Slippages are more muted compared to October, indicating a positive trend. - Srikanth Gopalakrishnan, Joint Managing Director & CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
