FIVESTAR - Five-Star Business Finance Ltd. Share Price

Major Q&A from the Five-Star Q2 FY 2026 Earnings Call

Question 1:

Renish: Sir, regarding the early bucket pool, 30 plus DPD has gone above 12%. How do you see this evolving going forward?

Lakshmipathy Deenadayalan: Our key focus is to stabilize performance across all buckets, aiming to reduce slippages from current customers. We expect the 30 DPD bucket to stabilize and decrease in the upcoming quarters as our focus shifts to managing current customer performance.

Question 2:

Viral Shah: Can you elaborate on the changes to sourcing and underwriting, and when you expect to return to a disbursement run rate of Rs. 1,400 crores?

Lakshmipathy Deenadayalan: We've implemented tighter underwriting and risk oversight, leading to a higher rejection rate. This new process will take time for our 5,000 officers to adapt, but improvements in disbursement should begin in Q3, with a stronger push in Q4.

Question 3:

Abhijit Tibrewal: Can you provide geographic insights on performance and growth expectations for the rest of FY'26?

Srikanth Gopalakrishnan: We see stabilization across geographies, with Karnataka as an outlier but limited impact overall. Our guidance remains unchanged, and we expect growth across the board, with a focus on stabilizing operations and improving asset quality.

Question 4:

Raghav: As you aim to grow, will the intensity of hiring remain high, or do you plan to slow down?

Lakshmipathy Deenadayalan: Infrastructure development will continue unless business projections appear dismal. With the outlook for small business loans appearing favorable, we plan to maintain hiring levels to support future growth.

Question 5:

Amit Khetan: What are your expectations for OPEX to total assets moving forward, given higher credit costs?

Srikanth Gopalakrishnan: For the short to medium term, we continue to guide OPEX around 5%-5.5%. While we will experience some upfront costs, especially in collections, we anticipate seeing efficiency gains as we scale.

Question 6:

Kunal Shah: Can you clarify the recent personnel changes in account management?

Srikanth Gopalakrishnan: We've integrated roles; previous cashiers are now combined with operations personnel. This adjustment reflects increased digital adoption and aims to enhance operational efficiency.

Question 7:

Ajit Kumar: Can we expect significant disbursement growth in the second half, given the current pace?

Srikanth Gopalakrishnan: A target of Rs. 1,800"“1,900 crores per quarter is achievable in the second half, as we've historically handled similar volumes. We won't change our guidance; operational stability is our priority.

Question 8:

Mahrukh Adajania: Is your credit cost guidance of 1.25-1.35% primarily influenced by borrower leverage or external conditions?

Srikanth Gopalakrishnan: The credit cost guidance accounts for both rising stress in the sub-3 lakh segment and the need for flexibility in collecting dues, thus requiring an adjustment from our past targets.

Question 9:

Siraz Khan: How do you see the growth trajectory of new housing loans?

Lakshmipathy Deenadayalan: We expect housing loans to contribute around Rs. 100-150 crores this fiscal year, slowly scaling up as we monitor adoption. The focus remains on core segments for future growth.

These summaries provide insight into the strategic approaches the company is taking amid the current challenges and expectations regarding future performance.