Five-Star margin falls for third straight quarter as costs outpace revenue
Net profit grew +1.92% YoY, while management reported record disbursements and 97.9% collection efficiency.
Filed 25 Jul 2026, 18:59 IST · after market close · Five-Star Business Finance Ltd (FIVESTAR)
Key takeaways
- Standalone operating margin fell 3.80 percentage points YoY to 70.63% as expenses grew +21.03% against revenue growth of +5.38%.
- Net profit grew only +1.92% YoY despite interest expense declining -8.43%.
- Management reported record quarterly disbursements of Rs 14,964 million, up +23.00% QoQ and +16.00% YoY.
Price around the results
Costs push standalone margin below the peer median
Revenue grew +5.38% YoY, but expenses rose +21.03%, leaving operating profit flat and reducing the margin by 3.80 percentage points. The 70.63% operating margin was 1.59 percentage points below the 72.22% median for the 22 Financial Services peers that have reported. Sequentially, revenue rose +1.47% while expenses increased +7.19%, narrowing the margin by 1.57 percentage points.
Lower interest expense partly offsets operating pressure
Interest expense fell -8.43% YoY and -5.45% QoQ, helping pre-tax profit grow +1.97% YoY and +1.35% QoQ despite the weaker operating margin. Other income increased +116.41% YoY, but contributed only 2.70% of pre-tax profit, so earnings were not materially dependent on it. The tax rate increased 0.05 percentage points YoY and 0.42 percentage points QoQ, rather than flattering net profit.
Record disbursements came in a seasonally weak quarter
Management said Q1FY27 was the company's seasonally weakest quarter, while reporting quarterly disbursements of Rs 14,964 million, up +23.00% QoQ and +16.00% YoY. The company said it opened 12 branches during the quarter and recorded 97.9% customer collection efficiency excluding NPA loans. Management said strong collections should lead to consistent improvement in asset-quality metrics in coming quarters, and added that it raised Rs 4,500 million at an all-inclusive cost of 8.33% despite unfavourable liquidity conditions.
Margin has declined for three consecutive quarters
Operating margin has fallen from 75.79% in Q2FY26 to 74.51% in Q3FY26, 72.20% in Q4FY26 and 70.63% in Q1FY27. After the last eight results, the stock rose three times and fell five times, with a median absolute move of 5.82%. The Q1FY27 results were filed after market close.
Q1FY27 at a glance
Standalone figures as filed with NSE — cross-checked against an independent source.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹829 cr | ₹817 cr | +1.47% | +5.38% |
| Other income | ₹10 cr | ₹9 cr | +7.14% | +116.41% |
| Expenses | ₹243 cr | ₹227 cr | +7.19% | +21.03% |
| Operating profit | ₹586 cr | ₹590 cr | -0.73% | +0.00% |
| Operating margin (%) | 70.63% | 72.20% | — | — |
| Interest | ₹172 cr | ₹181 cr | -5.45% | -8.43% |
| Depreciation | ₹9 cr | ₹10 cr | -8.81% | +12.04% |
| Profit before tax | ₹362 cr | ₹357 cr | +1.35% | +1.97% |
| Tax | ₹91 cr | ₹88 cr | +3.05% | +2.14% |
| Net profit | ₹271 cr | ₹269 cr | +0.79% | +1.92% |
| EPS (₹) | ₹9.19 | ₹9.14 | +0.55% | +1.66% |
Operating margin of 70.63% compares with a Financial Services sector median of 72.22% across 22 peers that have reported Q1FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Quarterly disbursements reached a historical best of INR 14,964 million, rising 23% sequentially and 16% year on year.
- Customer collection efficiency excluding NPA loans was 97.9% in the quarter ended June 30, 2026.
Guidance & outlook
- The company expects asset-quality metrics to improve consistently in the coming quarters due to strong collections.
Expansion
- The company opened 12 branches during Q1FY27.
Problems & risks
- Q1FY27 was seasonally the weakest quarter for the company.
- The company borrowed despite unfavourable liquidity conditions.
- The company maintained its spreads despite a decline in yields.
What to watch
- Whether standalone operating margin holds above 70.63% after three consecutive quarterly declines.
- Whether expenses grow slower than the +21.03% YoY pace recorded against +5.38% revenue growth.
- Whether collection efficiency remains near 97.9% excluding NPA loans.