Five-Star Business Finance reported its Q3 FY26 results, detailing a focus on stabilizing collections and managing asset quality during challenging times. The company saw a slight increase in the current proportion of its portfolio and maintained stable collection efficiencies. While slippages remained elevated, recoveries from NPA also occurred. The lender is focusing on long-term strategies over accelerated growth, investing in collection infrastructure and personnel.
Focus on Collections and Asset Quality
Five-Star Business Finance has prioritized collections and stability in asset quality during the third quarter of FY26. Actions taken on underwriting and collections have resulted in continued stability. The current proportion of the portfolio improved to 81.77% in December from 81.67% in September.
Collection Efficiency
The collection efficiency remained stable, with unique customer collection efficiency at 95.1% and overall collection efficiency at 96.6%. Excluding NPA loans, the unique customer collection efficiency increased to 97.26%.
Asset Quality and Recoveries
Slippages into Stage-3 or NPA assets remained elevated. Recoveries from NPA and technical write-offs reached INR 23 crores for the quarter. Credit cost marginally increased to 1.44% from 1.34% in Q2, reflecting adequate provision coverage.
Financial Performance
Disbursements for the quarter stood at INR 976 crores. The cost of incremental debt was 8.19%. The cost of funds on the book decreased by over 50 bps year-on-year to 9.12%. The company reported a PAT of INR 277 crores for the quarter, up from INR 274 crores in Q3 of the previous year. ROA and ROE remained at 7% and 15.8%, respectively.
Strategic Initiatives
The company added 35 branches and 678 business and collection officers during Q3. The lender also signed a loan agreement with the Asian Development Bank for a sanction limit of $100 million.
Future Outlook
Five-Star Business Finance expects improvements in growth and asset quality over the next few quarters. The company is focused on strengthening its collection strategy and infrastructure before accelerating disbursements. It anticipates benefiting from a further reduction of costs and expects to maintain healthy provision coverage.
Source: BSE
