Buy Five Star Business Finance; target of Rs 800: Motilal Oswal

Motilal Oswal is bullish on Five Star Business Finance has recommended buy rating on the stock with a target price of Rs 800 in its research report dated July 29, 2025.

Broker Research

July 30, 2025 / 21:02 IST

BUY

26 Aug, 2025 12:21

Volume

Todays L/H

Motilal Oswal's research report on Five Star Business Finance

Five Star Business Finance’s (FIVESTAR) 1QFY26 PAT grew 6% YoY to INR2.7b (in line). 1QFY26 NII grew ~20% YoY to INR5.8b (in line), while PPoP rose ~14% YoY to INR4b (in line). Other income declined 6% YoY to INR265m, primarily due to a decline in investment income. Opex grew ~29% YoY to INR2b (in line). Credit costs stood at INR254m (~9% lower than MOFSLe) and annualized credit costs rose sharply to ~1.3% (PY: ~74bp and PQ: ~73bp). Rangarajan Krishnan (Jt-MD & CEO) has decided to step down to pursue an entrepreneurial venture. Mr. Lakshmipathy Deenadayalan (MD), along with the support of his senior leadership team, will now lead all operational responsibilities in the company.

Outlook

We estimate FIVESTAR to post a CAGR of ~25%/13% in AUM/PAT over FY25-FY27, along with RoA/RoE of 7%/17% in FY27E. Reiterate our BUY rating on the stock with a TP of INR800 (premised on 2.7x Mar’27E P/BV).

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