Buy Five Star Business Finance; target of Rs 590: Motilal Oswal

Motilal Oswal is bullish on Five Star Business Finance has recommended buy rating on the stock with a target price of Rs 590 in its research report dated January 30, 2026.

Broker Research

February 02, 2026 / 18:19 IST

Buy

Motilal Oswal's research report on Five Star Business Finance

Five Star Business Finance’s (FIVESTAR) 3QFY26 PAT grew ~1% YoY to INR2.8b (in line). NII grew ~12% YoY to INR6.1b (in line). Other income rose 33% YoY to INR264m (vs. MOFSLe of INR370m). The quarterly dip in the other income was primarily due to the dip in the treasury income. Opex grew 21% YoY to INR2.1b (in line). It made provisions of ~INR21m towards employee benefits on account of the new labor codes. PPoP rose ~10% YoY to INR4.3b (in line). Credit costs were INR571m (in line). Annualized credit costs stood at ~1.5% (PQ: ~1.35% and PY: ~0.7%).

Outlook

The stock currently trades at 1.5x FY27E P/BV. We estimate FIVESTAR to post a CAGR of ~21%/~15% in AUM/PAT over FY26-28E with an RoA/ RoE of 6.9/16% in FY28E. Reiterate BUY with a revised TP of INR590 (based on 1.8x Dec’27E BV).

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