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Five-Star Business Finance Limited (FIVESTAR) AI Stock Analysis

IN:FIVESTAR

Five-Star Business Finance Limited

(NSE:FIVESTAR)

Select Model
Rating:60Neutral
Price Target:INR 436.00▲(10.53% Upside)
Action:reiterated
Date:10/27/26

The score is held back primarily by cash-flow inconsistency and elevated leverage in the financials, alongside a clear technical downtrend (below key moving averages with negative MACD). Offsetting factors include a relatively low P/E valuation and a constructive earnings-call outlook with guidance confidence and improving collection/credit indicators, though near-term margin pressure and sticky delinquencies remain risks.

Positive Factors
Secured niche lendingCollateral-backed lending to underserved self-employed customers gives Five-Star a focused operating niche and can support disciplined risk selection. Its branch-led presence in semi-urban and rural markets may deepen local relationships and create durable access to borrowers underserved by larger lenders.
Negative Factors
Volatile cash generationSeveral years of negative operating and free cash flow reduce confidence in the consistency of internal funding generation, even after the FY2026 improvement. Such volatility can increase reliance on external borrowing and constrain flexibility during periods of slower collections or weaker loan demand.

Five-Star Business Finance Limited (FIVESTAR) vs. iShares MSCI India ETF (INDA)

-50%-40%-30%-20%-10%0%10%IN:FIVESTAR-39.37%INDA-12.02%Dec '25Jan '26Feb '26Mar '26Apr '26May '26Jun '26Jul '26Aug '26Sep '26Oct '26
Market Cap
INR 117.15B
Dividend Yield
0.51%
Average Volume (3M)
87.41K
Price to Earnings (P/E)
10.5
Beta (1Y)
0.94
Revenue Growth
8.86%
EPS Growth
0.71%
Country
India
Employees
6,564
Sector
General
Sector Strength
55
Industry
Financial - Credit Services

Five-Star Business Finance Limited Business Overview & Revenue Model

Company Description

Five-Star Business Finance Limited operates as a non-banking financial company in India. It offers small business and mortgage loans to micro-entrepreneurs and self-employed individuals for business purposes, home renovation, marriage, healthcare, an...

Five-Star Business Finance Limited Earnings Call Summary

Earnings Call Date:Oct 25, 2026(Q2-2027)|% Change Since:-12.00%|Next Earnings Date:Feb 03, 2027
Earnings Call SentimentPositive

The call was strongly positive overall, supported by record disbursements, double-digit AUM growth, improving collections, stable asset quality, higher profitability, strong liquidity, and confidence of exceeding growth guidance. The main offsets were expected spread compression from higher funding costs, elevated operating expense ratios, sticky later-stage delinquencies, prolonged write-off recovery timelines, and muted October disbursements.

Positive Updates

Record Disbursements and Strong Loan-Book Growth
Historical-best quarterly disbursements reached INR 2,078 crores, up 39% over the previous quarter and 74% year-on-year. AUM reached INR 14,640 crores, increasing 6.7% sequentially and 14% year-on-year.

Negative Updates

Expected Spread and NIM Compression
Management said margin expansion is not expected and that spreads will compress because of repo-rate and MCLR increases. Incremental borrowing costs are expected to rise to approximately 8.70%-8.75% in the second half, while cost of funds on the book could rise by another 12-15 basis points by the end of FY 2027 to approximately 8.90%.

Company Guidance

Management expects to “cross our growth guidance for this year very comfortably” and “comfortably cross our AUM guidance”; slippages and credit cost are expected to be “flattish” for the rest of the year, with slippages “at around the 70 basis point levels” for the next couple of quarters, while gross Stage 3 assets may see a “marginal gradual drop over the next couple of quarters” and GNPA ratios are expected to improve in FY 2028. Incremental borrowing costs are expected at “870-875” in the second half, with cost of funds on the book “12-15 basis points” higher by the end of FY 2027, potentially reaching “more around an 890 kind of a number”; the “1%” incremental yield is expected to be absorbed over “eight quarters or so” and a large part to come in over “24-36 months.” OpEx is expected to trend down by “50-75 basis points” over the next couple of years to “somewhere between 6.75%-7%,” October disbursements are expected to be “somewhere around INR 550 crores,” and November and December are expected to “get to a good growth number over the previous quarter”; the target ticket-size mix remains 25% sub INR 3 lakhs, 50% INR 3 lakh-INR 5 lakhs, and 25% INR 5 +lakh, while full-year NPA resolution is expected to “cross INR 100 crores” and recoveries on write-offs are expected more from FY 2028 and FY 2029 onwards.

Five-Star Business Finance Limited Financial Statement Overview

Summary

Strong profitability and steady revenue/earnings growth (Income Statement score 86) are offset by elevated and rising leverage (Balance Sheet score 72) and especially weak/volatile cash generation with multi-year negative OCF/FCF before a sharp FY2026 reversal (Cash Flow score 34), reducing confidence in funding resilience.

Income Statement

86Very Positive

Balance Sheet

72Positive

Cash Flow

34Negative
Financial statement breakdown
BreakdownTTMMar 2026Mar 2025Mar 2024Mar 2023Mar 2022
Income Statement
Total Revenue33.30B32.46B27.06B20.78B14.70B12.33B
Gross Profit22.32B24.35B16.61B12.70B10.07B6.96B
EBITDA15.88B15.00B15.36B11.72B9.09B6.39B
Net Income11.17B10.99B10.72B8.36B6.03B4.54B
Balance Sheet
Total Assets161.78B157.90B144.21B116.89B87.03B63.43B
Cash, Cash Equivalents and Short-Term Investments11.28B21.49B21.55B16.72B15.81B9.18B
Total Debt79.68B82.00B79.22B63.16B42.47B25.59B
Total Liabilities82.75B84.10B81.16B64.93B43.63B26.33B
Stockholders Equity79.03B73.80B63.05B51.96B43.40B37.10B
Cash Flow
Free Cash Flow013.50B-11.28B-21.45B-11.35B-2.86B
Operating Cash Flow013.76B-10.45B-21.22B-11.23B-2.77B
Investing Cash Flow0-14.12B-5.85B2.10B1.62B-3.84B
Financing Cash Flow01.57B15.93B21.06B16.88B70.24M

Five-Star Business Finance Limited Technical Analysis

Technical Analysis SentimentNegative
Last Price394.45

Price Trends

50DMA507.26Negative
100DMA516.15Negative
200DMA478.87Negative

Market Momentum

MACD-29.60Positive
RSI20.81Positive
STOCH5.90Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IN:FIVESTAR, the sentiment is Negative. The current price of 394.45 is below the 20-day moving average (MA) of 477.34, below the 50-day MA of 507.26, and below the 200-day MA of 478.87, indicating a bearish trend. The MACD of -29.60 indicates Positive momentum. The RSI at 20.81 is Positive, neither overbought nor oversold. The STOCH value of 5.90 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for IN:FIVESTAR.

Five-Star Business Finance Limited Peers Comparison

Overall Rating

UnderperformOutperform
Sector (55)

Financial Indicators

IN:FIVESTAR against its peers
NameOverall RatingMarket CapP/E RatioROEDividend YieldRevenue GrowthEPS Growth
IN:MASFININ:MASFIN66NeutralINR 44.29B10.64―0.82%22.71%23.45%
IN:SBFCIN:SBFC65NeutralINR 94.00B18.22――28.39%28.14%
IN:IIFLIN:IIFL62NeutralINR 225.36B9.01―0.76%36.50%190.08%
IN:CGCLIN:CGCL61NeutralINR 221.82B16.92―0.09%53.04%65.82%
IN:FIVESTARIN:FIVESTAR60NeutralINR 116.44B10.48―0.51%8.86%0.71%
Sector *55Neutral$6.65B3.83-15.92%6.20%10.91%7.18%
IN:INDOSTARIN:INDOSTAR48NeutralINR 29.63B-7.57――-1.90%-151.41%

* General Sector Average

Performance Comparison

-40%-20%0%20%IN:FIVESTARIN:CGCLIN:IIFLIN:INDOSTARIN:MASFININ:SBFCDec '25Jan '26Feb '26Mar '26Apr '26May '26Jun '26Jul '26Aug '26Sep '26Oct '26
IN:FIVESTAR and its peers over the selected period
Show on chartTickerCompany NamePriceChange% Change
IN:FIVESTARFive-Star Business Finance Limited394.45-263.21-40.02%
IN:CGCLCapri Global Capital Limited230.5527.4013.49%
IN:IIFLIIFL Finance Limited528.00-8.23-1.54%
IN:INDOSTARIndoStar Capital Finance Limited183.30-73.75-28.69%
IN:MASFINMAS Financial Services Ltd.244.10-74.17-23.31%
IN:SBFCSBFC Finance Limited84.72-33.78-28.51%

Five-Star Business Finance Limited Corporate Events

Five-Star Business Finance Expands Equity Base via Employee Stock Option Allotment

Sep 15, 2026

Five-Star Business Finance Limited has marginally expanded its equity base through the allotment of 7,040 shares following the exercise of options under its Associate Stock Option Scheme, 2018. The paid-up share capital increased from INR 29,51,88,61...

Five-Star Business Finance files FY 2025-26 sustainability report with exchanges

Aug 6, 2026

Five-Star Business Finance Limited has submitted its Business Responsibility and Sustainability Report for the financial year 2025-26 to the National Stock Exchange of India and BSE, in compliance with Regulation 34(2)(f) of SEBI’s Listing Obli...

Five-Star Business Finance to Seek Shareholder Nod for ₹5,000 Crore NCD Programme at AGM

Aug 6, 2026

Five-Star Business Finance Limited has scheduled its 42nd Annual General Meeting for August 31, 2026, at 10:00 a.m. IST, to be held via video conferencing and other audio-visual means. The AGM notice and related details are available on the company&#...

Five-Star Business Finance Schedules Virtual Meeting With Sameeksha Capital

Aug 5, 2026

Five-Star Business Finance Limited has informed the stock exchanges that its officials will hold a virtual one-on-one investor and analyst meeting with Sameeksha Capital on August 06, 2026. The company has made its investor presentation publicly avai...

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.

Date of analysis: Oct 27, 2026