Buy Five Star Business Finance; target of Rs 950: Motilal Oswal

Motilal Oswal is bullish on Five Star Business Finance has recommended buy rating on the stock with a target price of Rs 950 in its research report dated August 01, 2024.

Broker Research

August 04, 2024 / 21:53 IST

BUY

26 Aug, 2025 12:21

Volume

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Motilal Oswal's research report on Five Star Business Finance

Five Star Business Finance (FIVESTAR)’s 1QFY25 PAT grew 37% YoY to ~INR2.5b (in line). NII grew ~31% YoY to INR4.8b (in line), and PPoP rose ~36% YoY to INR3.55b (in line). Other income grew 43% YoY to INR283m, aided by higher gains on fair value changes. Opex grew ~24% YoY to INR1.57b (in line). Credit costs at INR185m translated into annualized credit costs of ~70bp (PY: ~90bp). Management shared that the company will be passing on the benefits of its cost of borrowings to its customers through a lending rate cut of ~50-75bp (on incremental disbursements) over the next nine months. These rate cuts will be introduced as early as in Aug’24. This will result in gradual moderation in portfolio yields over the course of this and the next fiscal year.

Outlook

We reiterate our BUY rating on the stock with a TP of INR950 (premised on 3.7x Mar’26E BVPS).

For all recommendations report, click here