With a widespread branch-led distribution network and expansion in new regions, Five Star is set to capture a larger share of the untapped MSME lending space while maintaining its competitive advantage in underwriting and collections.
NDTV Profit's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages, asset managers and research agencies. These reports offer NDTV Profit's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
-
Indian Markets Turning Corner After Two Tough Years, Says Sandeep Tandon -
NDTV Profit Ignite 2026: Experts See Opportunity In Equities, Stay Bullish For Long-Term -
Buy Right, Sit Tight Does Not Work for Individual Stocks, Says Dinshaw Irani -
'Worst Is Behind': Quant MF Sees Market Bottom, Flags 'Extreme Euphoria' In Midcaps -
India's Mutual Fund Industry Could Become A $1 Trillion Opportunity, Say Fund Managers -
'Foreign Investors Are Baraatis': Raamdeo Agrawal's Take On LTCG Tax -
Stay Invested Through Market Cycles: Raamdeo Agrawal at NDTV Profit Ignite -
Ramesh Damani Remains Bullish On India For Next 20-30 Years, Sees Bargains Amid Market Weakness -
CAS Came After A Long Consultation Process: SEBI Chairman Tuhin Kanta Pandey AT NDTV PROFIT IGNITE -
Aim To Cut FPI Onboarding Time From Mth To Five Days: SEBI Chairman Tuhin Kanta Pandey AT NDTV PROFI
Motilal Oswal Report
Five Star Business Finance Ltd. currently trades at 2.3x FY27E price/book value. The stock has undergone a decent correction following the company's downward revision in its AUM growth guidance, coupled with customer overleveraging, which raised concerns about any potential deterioration in asset quality.
Also Read | Layoffs Are Rising In Tech, But These Skills Are Helping People Unlock Better Pay
However, the company has consistently maintained strong asset quality even in a challenging external environment.
We believe that valuations will re-rate when the company emerges out of the current macro weakness without any significant impact on its asset quality and again embarks on a stronger AUM growth trajectory.
We believe that Five Star is sweetly positioned to leverage the strong target opportunity in the small business loans (SBL with a ticket less than Rs 500,000) segment. The company continues to strengthen its business model through a combination of improvements in its underwriting model and investments in technology to drive operational efficiency and better productivity of its branches and employees.
We estimate Five Star to deliver a ~26%/19% AUM/PAT CAGR over FY24-FY27, along with RoA/RoE of 7.1%/17.4% in FY27E. We reiterate our Buy rating on the stock with a target price of Rs 900 (premised on 3x Mar'27E book value per share).
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
