{"id":182091,"date":"2026-04-29T02:38:11","date_gmt":"2026-04-29T06:38:11","guid":{"rendered":"https:\/\/alphastreet.com\/india\/five-star-business-finance-ltd-fivestar-q4-2026-earnings-call-transcript\/"},"modified":"2026-04-29T02:42:53","modified_gmt":"2026-04-29T06:42:53","slug":"five-star-business-finance-ltd-fivestar-q4-2026-earnings-call-transcript","status":"publish","type":"post","link":"https:\/\/alphastreet.com\/india\/five-star-business-finance-ltd-fivestar-q4-2026-earnings-call-transcript\/","title":{"rendered":"Five-Star Business Finance Ltd (FIVESTAR) Q4 2026 Earnings Call Transcript"},"content":{"rendered":"

Note:<\/strong> This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.<\/em><\/p>\n

Five-Star Business Finance Ltd (NSE: FIVESTAR) Q4 2026 Earnings Call dated Apr. 29, 2026<\/span><\/strong><\/p>\n

Corporate Participants:<\/h2>\n

Lakshmipathy Deenadayalan<\/strong> \u2014 Chairman and Managing Director<\/em><\/p>\n

Srikanth Gopalakrishnan<\/strong> \u2014 Joint Managing Director and Chief Financial Officer<\/em><\/p>\n

Analysts:<\/h2>\n

Raghav Garg<\/strong> \u2014 Analyst<\/em><\/p>\n

Renish Bhuva<\/strong> \u2014 Analyst<\/em><\/p>\n

Unidentified Participant<\/strong><\/p>\n

Abhijit Deverewa<\/strong> \u2014 Analyst<\/em><\/p>\n

Unidentified Participant<\/strong><\/p>\n

Viral Shah<\/strong> \u2014 Analyst<\/em><\/p>\n

Unidentified Participant<\/strong><\/p>\n

Unidentified Participant<\/strong><\/p>\n

Divyansh Gupta<\/strong> \u2014 Analyst<\/em><\/p>\n

Unidentified Participant<\/strong><\/p>\n

Presentation:<\/h2>\n

Operator<\/strong><\/p>\n

Ladies and gentlemen, good day and welcome to the Five Star Business Finance Limited Q4FY26 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that that this conference is being recorded. I now hand the conference over to Mr.<\/p>\n

Raghav Garg from Ambit Capital. Thank you. And over to you sir.<\/p>\n

Raghav Garg<\/strong> \u2014 Analyst<\/em><\/p>\n

Good morning everyone. On behalf of Ambit Capital, I would like to welcome you all to the Q4FY26 earnings call for Five Star Business Finance. Joining us from the management Today we have Mr. Lakshmpati Bhindhyalam, Chairman and Managing Director, Mr. Srikanth Gopal Krishnan, Joint Managing Director and CFO and Mr. Prashant, Chief of Treasury and Investor Relations. I thank the management for the opportunity to host this earnings call. We can now begin with opening remarks from Mr. Lakshmi Patel post which we can open the floor for questions.<\/p>\n

Thank you. And over to you Mr. Bhak.<\/p>\n

Lakshmipathy Deenadayalan<\/strong> \u2014 Chairman and Managing Director<\/em><\/p>\n

Yeah. Good morning everyone. Thank you Raghav. We have just completed one of the most challenging years for Five Star. The asset quality headwinds faced by MFIs and unsecured loans. Unsecured loan lenders over the last couple of years creeped into the portfolios of secured loan lenders also especially those providing small ticket loans. As a company we all know five Star provides loans to small business owners and self employed individuals with a higher proportion of MFI overlap. This resulted in increase in DPDs and NPA for five star during the course of this financial year.<\/p>\n

However, the actions taken by us over the last few quarters have helped us to tide over these challenging times and I’m very happy to state that the worst is behind us and the coming quarters will see us moving in one direction. Onwards and upwards. So let me get into the quarter that just got completed in the current quarter has been very encouraging with collection efficiency across all buckets showing excellent improvements and getting back to the robust levels. This shows our strength in credit underwriting and collection infrastructure.<\/p>\n

I wanted to share few collection metrics that clearly shows this trend. For the quarter ended March 31st, 2026 we clocked a unique customer collection efficiency of 98.1% which is one of our best in the history of five Star. Our ex bucket collections for the quarter came in at 99.3% which has helped contain forward flows from x buckets. Our slipperage ratio has dropped from 1.09% in last quarter to 0.7% in this quarter. This has helped our NPA remain largely stable between the quarters at 3.37%.<\/p>\n

Grid cost has remained largely stable at 1.88% of the average AEM for the Q4 compared with 1.76% in last quarter. After quarters of continuous drop, the current proportion, the customers who are in current buckets has moved up almost by close to 1% from 81.77% in Q3 to 82.69% in Q4. So all the above metrics what I said clearly shows the collection efficiency across all buckets are back to our normal trends. With our collection strategies in place and our collection efforts showing strong traction, we started to refocus on distribution and portfolio growth during the current quarter.<\/p>\n

Our disbursement for the quarter came in at 1213 crores, an increase of 24% over the previous quarter. Our disbursement for the full year came in at 4675 crores which has allowed us to clock a portfolio growth of 11% even during a challenging year. During the quarter ended March 31st, 2026 we availed an incremental debt of 928 crores at an all inclusive cost of 8.53%. We raised 100 million from Asian Development Bank ADB, one of the largest development financial institutions across the globe during this quarter which is a reinforcement of lenders belief in five Star.<\/p>\n

While the all inclusive cost was slightly higher than the previous quarter, it was primarily on account of higher edging cost we have to pay on this transaction. Our cost of funds for the quarter dropped from 9.12% in Q3 to 8.95% in Q4 and for the full year we saw a drop in our cost of fund from 9.64% in last year to 9.21% this year. For the quarter we achieved a PAT of 269 crores. While this is 3% lower as compared to the previous quarter on account of higher personal expense, I want to reinforce the fact over pat for the full year we grew even in such a challenging year by 2% and we clocked a full year PAT of 1099 crores.<\/p>\n

Our return on average AEM and return on equity for the financial year 2026 remains healthy at 8.68% and 16% respectively. I also want to touch upon another aspect that has created a bit of overhang on us during this year. There was a senior management exit during this year. But I want to clearly lay down the fact this has no impact on our performance. As can be seen from our results, this is a testimony to the strength and depth of our team both at the management and the branches level. We have built a team that has never been and will never be dependent on one or few individuals.<\/p>\n

It may sound glitched, but men may come and men may go, but we go forever. Now as we step into a new financial year, we are geared up to get back on the track of growth and will poise to achieve a AUM growth of around 20% for the financial year 2027 and thereafter. We will slowly move upwards as in the past, we will aim at achieving strong yet sustainable growth, quality and profitability through robust credit underwriting, strong collections and proactive risk management backed by use of adoption of technology and AI and and supported by a diversified and cost effective fund profile.<\/p>\n

The way we handle the challenges gives me immense confidence and clearly shows that we have emerged stronger and will move onwards and upwards. Thank you. Now I hand over the call to Srikanth for more in detail.<\/p>\n

Srikanth Gopalakrishnan<\/strong> \u2014 Joint Managing Director and Chief Financial Officer<\/em><\/p>\n

Very good morning to all of you. As Mr. Patil has highlighted, I think this has been a quarter which has reinforced our confidence in the business model and the execution capability of five Star and we are very hopeful and confident that each of you on the call and the investors will also feel reinforced with the kind of results that we have been able to demonstrate in this quarter. Let me touch upon just few aspects on the numbers before I hand it over for any questions. Despite dropping our yields by 2% about a year and a half back, our spreads continue to remain quite healthy.<\/p>\n

In fact, the drop in spread for the full year has just been at 40 basis points despite the incremental disbursements coming in at about 200 basis points. So we have been able to get good cost of funds to stem the drop in spread. This has resulted in strong return on average AUM at 8.37% and an ROE of close to 16% for the full year. From the borrowing perspective I think we are being looked at very attractively by the lenders. Like Mr. Pathi said, ADB has given 100 million line to us out of which we have drawn 50 million during this quarter and another 50 million is available for us to draw anytime over the next financial year.<\/p>\n

While this has come in at slightly higher cost because of the hedging cost involved, but this reinforces the fact that even some of the largest lenders of the world are ready to back the company because of its strong underwriting capability and collection infrastructure. Our pack for the quarter stood at about 269 crores because of slight increase in personal expenses. This is lower on a sequential basis and on a yoy basis our network stands at a very healthy number of about 7,400 crores. 7,380 crores to be precise.<\/p>\n

We continue to have a good provision coverage ratio both on the overall assets and on the stage three assets. Our overall coverage is at 1.84% and on stage three we are at 41.4%. Given that there has been some betterment in the buckets, especially in the stage two composition, the stage two proportion has dropped a little bit. In fact, our 61 to 90 day bucket has actually come down from about 5.1% to 4.8% because of which you see a small drop in the stage two provision coverage. But we generally track the overall provision coverage because this is what gives confidence on the balance sheet and on the quality of assets that we are holding.<\/p>\n

As a management team we are very confident that we have bounced back in the best manner possible. We have taken the right set of actions as a company. We have faced multiple challenges during this year. Asset quality challenges, people related challenges. But every one of them have been faced by us and we have overcome them in the best MANNER possible. Like Mr. Pati said, I think from here onwards the performance is going to be in one direction which will be onwards and upwards. That’s the confidence we as a management team have.<\/p>\n

And we would like to make each and every one of you feel confident about the ability of the company to bounce back and grow in the coming years. So on that note we’ll take a pause and very happy to address any questions any of you may have. Thank you.<\/p>\n

Questions and Answers:<\/h2>\n

Operator<\/strong><\/p>\n

Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may present. Take<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

A couple of minutes for the question queue to assemble.<\/p>\n

Operator<\/strong><\/p>\n

Sure, sir. Anyone who wishes to ask a question may press Star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Ranish from icici. Please go ahead.<\/p>\n

Renish Bhuva<\/strong><\/p>\n

Yeah. Hi sir. Congrats on a good set of numbers. So just two things. One, you know on this asset quality metric. So just<\/p>\n

Operator<\/strong><\/p>\n

Wanted to know how April is trending. You know in terms of collection and flows and also if you can give some insight on disrespect, run rate in April as well.<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

Pradesh April is a seasonally weak quarter, but given that we are coming off a year when we had some challenges, we don’t expect material deterioration to happen in April. But at the same time, given that it’s a seasonally weak quarter, we also don’t expect material improvements to come through. So far, April is trending quite well. I think we are largely in line with a typical April month, both in collections across various buckets and our belief is that I think this quarter also should be fairly good from an asset quality perspective.<\/p>\n

Disbursements are looking up. In fact, one of the things that we have done, and we had also highlighted this in the commentary, in the presentation and in the Exchange release, the split between business and collections is fully operational from the 1st of April and we expect that this will pave way for a strong disbursement to come. In it’s early days, obviously people are just getting acclimatized to doing different things. But you know, things are looking good, we are getting strong lead indicators and we believe that even in this quarter we should be able to show a good disbursement growth.<\/p>\n

And so far, you know, the way the April is trending is giving us that belief that this quarter should be good both in terms of disbursement and asset quality.<\/p>\n

Operator<\/strong><\/p>\n

Got it, got it. And so just lastly on this credit cost front, so when, you know, when we look at Next generate, which is obviously, you know, coming down pretty sharply in Q4 and also when we look at X bucket, it clearly suggests that incremental flows are far lower than, you know, what it used to be during first time one of 26. So if this trend has to sustain, you know what kind of a credit cost we are building in for 27,<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

I think for FY27. See if you look at it, the trajectory of credit cost has been marginally going up over the last four quarters. For Q4 we ended with about 1.88% on average AUM, which is the number from where we will start showing an improvement. Definitely there will be an improvement. At this point of time we will probably be guiding you for credit cost of 1.7 to 1.75% for the next financial year depending on how the buckets trend over the year. This could look better from here, but our guidance will be about 1.7 to 1.75%.<\/p>\n

Operator<\/strong><\/p>\n

Got it, got it. And just to follow up on that so I’m sure because, you know, we are coming out from a, you know, sort of for long credit cycle and from peak, obviously it will improve in 27. But what kind of a steady state credit cost, you know, one should build in the segment when you operate. And also keeping in mind, you know, we are sort of pivoting towards meta rated customers, you know, in terms of ticket size. So how should, you know, one should think about the steady state credit cost, you know, let us say from 3 to 5 perspective.<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

So Ranesh, I think FY27, we gave you the numbers 28 to 30. Obviously with buckets getting better, the credit cost will trend better. So we are probably looking at anywhere between 1.5 to 1.6% of credit cost as a steady state number. I think we are confident about that. Like you rightly said, collections are getting better. The focus on slippages are a lot higher today. And to some extent we are also moving to slightly better quality customers. So maybe 1.5 to 1.6 would be the steady state cost for the next couple of years.<\/p>\n

Unidentified Participant<\/strong><\/p>\n

Got it. Got it. This very helpful, sir. Thank you and best of luck.<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

Thanks.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. The next question comes from the line of Abhijit Tiberwal from Motilal Oswald. Please go ahead.<\/p>\n

Abhijit Deverewa<\/strong><\/p>\n

Yeah. Good morning, sir. Thank you for taking my question. Abhijit,<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

Your voice is quite low.<\/p>\n

Abhijit Deverewa<\/strong><\/p>\n

Is it better now, sir?<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

Yes,<\/p>\n

Abhijit Deverewa<\/strong><\/p>\n

Sir. Thank you for taking my question. The first question I had is just a follow up on what you just answered to Ranesh, that steady state credit costs could be 1.5 to 1.6%. So if you could help us understand what has really changed in the last one year since this asset quality stress that we started seeing in the lower ticket lab. Basically what I’m trying to understand is going forward we are seeing that the World app with MFI customers will gradually become lower. We are moving to higher ticket sizes.<\/p>\n

You just mentioned we are moving to a better customer segment. So versus the credit cost at which we used to operate earlier and now steady state credit cost of 1.5, 1.6. So what has changed? I mean, earlier credit cost used to be let’s say 70, 80 basis points. Now we are looking at 1.5 to 1.6. So what has changed in the environment?<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

I think the earlier guidance that we gave was based on total assets which was about 0.8 to 1%. If you just convert into an AUM, that will probably read more like a 1 point, you know, 1.3 to 1.35% from where we are actually moving to 1.5 to 1.6. See what has changed is I think our understanding of the environment, our understanding of this customer segment and the skews that they will probably go through and the necessity to be a lot more consistent in our approach towards the credit cost build up is what we are saying.<\/p>\n

We will probably be operating at slightly elevated credit cost than what we have been handling. There are also macroeconomic events which are happening. There are other issues or stress that keeps cropping up and at that point of time, if you are looking at much lower credit cost then you are actually putting a lot of pressure on the field force and especially with our focus on growth also we need to maintain a good balance between the right growth number and the right credit cost, which is where we believe that I think 1.5 to 1.6 will be a comfortable number to achieve the stated growth objectives and we want to operate at those levels.<\/p>\n

Abhijit Deverewa<\/strong><\/p>\n

Got it, sir. So the second question I had was around basically in every earnings call, right. We’ve been asking this that are there any disruptions that we are seeing today on the ground? While most of them have acknowledged that there is nothing in April, which is very different or very alarming from March and I think you also alluded to when you answered the previous participant that April seasonally weak, there is some deterioration that typically happens in April, but business is picking up.<\/p>\n

So just trying to understand, given that we cater to a self employed segment which is often perceived as a little more vulnerable compared to other customers. But is your reading today that they have not been impacted as yet<\/p>\n

Renish Bhuva<\/strong><\/p>\n

And<\/p>\n

Abhijit Deverewa<\/strong><\/p>\n

They’ll kind of continue to pay for some more time basically their EMIs? Or do you think that maybe in the coming months there is a need to monitor this segment, the collections and as things shape up. Right. And the impact of the. I’m presuming you are.<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

You’re alluding to, you know, the macroeconomic, the geopolitical scenario, right?<\/p>\n

Abhijit Deverewa<\/strong><\/p>\n

Yes sir, that’s exactly what I’m alluding to.<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

Anyway, I don’t think that has had any major impact like what others have been highlighting. I think we are also not seeing any major impact of that. In fact, we did look at some parts of the portfolio which could potentially be impacted like those small E3s and NIRI remittances and all that. The proportion of that portfolio is firstly extremely small for us, sub 1%. And even on that we are not seeing any alarm signals at this point of time. The repayments are coming in well in line with the other portfolio.<\/p>\n

So at this point of time, we are also of the belief that we have not seen or not unlikely to see any material impact of the geopolitical scenario. But again, it’s something that we keep an eye on and we’ll keep monitoring. Hopefully we are probably getting to some solutions and if that happens, I think that will be a positive impact for us.<\/p>\n

Abhijit Deverewa<\/strong><\/p>\n

Got it. Srigan. Sir, and then last question I had was in the last 612 months, have we seen Alaric? We should<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

Probably go to the next participant. I think Abhijit has dropped off.<\/p>\n

Operator<\/strong><\/p>\n

So business is connected.<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

Yeah, now I can hear.<\/p>\n

Abhijit Deverewa<\/strong><\/p>\n

I heard you. I heard you. Maybe there’s some problem with the line. I heard your answer. And then the last question that I had was in the last six to 12 months, have we seen. Let’s just<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

Probably take it offline with Abhijit.<\/p>\n

Operator<\/strong><\/p>\n

Sure. So the next question comes from the line of Suraj Das from Sundaram Mutual Fund. Please go ahead.<\/p>\n

Unidentified Participant<\/strong><\/p>\n

Yeah, hi sir. Thanks for the opportunity. Sir, one question on roa. I mean how do you see the ROA panning out from here on even that your steady State is only 2030 which is lower than the current levels. And so therefore the ROA driver would be only margin. So how do you see that margin standing out? Do you see the margin probably coming down over a period of time while you scale because you increase on the ticket side and so forth and hence probably ROI should be here only at the current level of the fourth quarter or how you see roi.<\/p>\n

That is the only one<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

Cost, but it is also driven by leverage and that will keep going down obviously with leverage coming in. Our belief is, I think even for the current financial year which is FY27 and thereafter, we should be able to operate at a spread of around 13 and a half percent depending on the leverage, the margins will stack up where they are. And from an ROA perspective I think we believe that we should be able to operate at about 8.25 to 8.5% for this year and on a fairly steady state also about 8, 8 quarter levels we should be able to operate see today.<\/p>\n

It is also a function of a bit of leverage which is much lower. I think as the leverage keeps kicking in you will see some impact on the ROAs. But that will have a positive impact on ROE. But for this year I think eight quarter to eight half is an ROE that we should be able to operate at.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. The next question comes from the line of Viral Shah from IIFL Capital. Please go ahead.<\/p>\n

Viral Shah<\/strong><\/p>\n

Yeah, hi. Thanks for the Opportunity and congrats on good set of results. Shikant wanted to check three things if I may. One is you mentioned about the personal expenses. Was there any one off or is this just a reflection of the full build out cost of the collections vertical that we have built up?<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

So it’s a combination of both. Viral One is obviously the build out of the collections vertical and typically in Q4 you also give slightly higher incentives. Some schemes that we put in to actually spur the people to run for good collections and good growth. I wouldn’t call it as a one off but it’s a very typical phenomenon that you will see in the last quarter. Like how you see in the first quarter the increment impact coming in because the growth was slightly lower for this year. The personal cost looked a little bit on the higher side.<\/p>\n

But for these two I think it’s largely business as usual.<\/p>\n

Viral Shah<\/strong><\/p>\n

Got it. And Mr. Pathi mentioned about the growth of 20% for next year on a year basis. I understand this is there is some element of arithmetic behind that given the book, 10 hours of it. But how do you see it say on a steady state basis 28 and maybe even beyond what is the kind of growth outlook or aspiration that you would have<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

So viral I think given that one we are coming off a slightly lower growth year so there is some bit of pent up demand that will be there which we should be able to cater to. And also given the fact that our base is not as high so for example Even growing at 20% by the end of FY27 we will probably somewhere around close to 16,000 crores. So we still remain confident that at least for the next two to three years we should be able to clock a growth around 20%. So if I have to be conservative and give you a range it will probably be somewhere between 18 to 20%.<\/p>\n

But you know we are definitely at least for the next two to three years we are going to be aiming for a close to 20% growth.<\/p>\n

Viral Shah<\/strong><\/p>\n

Got it. And my last question Srikanth was just with regards to the yield, how much more pass through of the rate cuts that we had taken one and a half year back is still remaining. Understand this is on incremental basis but is it fully reflected on the book? And secondly given that now we are shifting also segments somewhat in terms of customers, do you foresee say some bit of element of yield compression in this year?<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

Viral I think the yields has largely been factored. So if I have to put a number, maybe you have another 40 to 50 basis points of impact. So we are today incrementally lending at around 22.5% and factoring for some delinquencies and all that, the book yield should be closer to about 22 to 22 quarter. And for Q4 we were at about 22.6. So I would probably say about 30, 40 basis points of further impact that may come in over the next three to four quarters. See the other point that you are setting, we have been reiterating consistently is that this is not a very price sensitive segment and it’s not like we are completely shifting our segment.<\/p>\n

We are going to be lending at 15, 20 lakhs where the borrowers are extremely price sensitive. We have to drop our yields. This is a segment where we have been operating at similar yields even in the past and for the last 12 months also we have been giving similar yields to these customers. So it doesn’t change primarily on account of us focusing more on the say closer to 5 lakh customers rather than the closer to 3 lakh customers. So we are really envisaging any material disruption to the yields on account of the slightly different focus that we may be carrying.<\/p>\n

Viral Shah<\/strong><\/p>\n

Got it? Very clear. Shikant. Thank you and all the best.<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

Thank you.<\/p>\n

Operator<\/strong><\/p>\n

The next question comes from the line of Kunal Tanvi from Banyan Tree Advisors. Please go ahead.<\/p>\n

Renish Bhuva<\/strong><\/p>\n

Thank you for the opportunity. I have two questions. One was, you know, during this. I’m sorry to interrupt. Kunal,<\/p>\n

Operator<\/strong><\/p>\n

You’re not quite audible. Could you please use your phone on the.<\/p>\n

Unidentified Participant<\/strong><\/p>\n

Better now.<\/p>\n

Operator<\/strong><\/p>\n

Yes, please go ahead. Yeah,<\/p>\n

Unidentified Participant<\/strong><\/p>\n

Yeah. I had three questions. The first one was, you know, when we have done this restructuring, organizational restructuring in terms of, you know, business and collection, you know, being different teams, can you, you know, throw, throw some light on, you know, what were the gaps that you saw? Because see we’ve been in the business for last 20 years and this is like one of the first time and we have seen a over leveraging cycle that we saw and in, in the first instance itself we have to reorganize the entire team like really interested in understanding, you know, what were the things that went wrong and how did we, how does this reorganization kind of corrected.<\/p>\n

Second question was on your last quarter’s comment on, you know, permanent over leveraging in the, you know, microfinance sector. If you can throw some light on how the overall sector is now playing out. What is your sense on the over leveraging bit? And the third thing is like see we, given our size, we’ve been always saying we, you know, the Structural growth will be chosen to 25%. Now Srikanth just alluded to the fact that we will be tracking closer to 18, 20% over the next three years. So is it that structurally our growth rates would be lower than what we were anticipating say two years back?<\/p>\n

If yes, then if you can help us understand why. Because like at one stage we are moving to a slightly higher ticket size and still if we will be growing slower than what we had kind of anticipated three years back, are there any things that we should know or you know, any reasons that we should know for the slower growth? Thanks. These are three questions that I have.<\/p>\n

Lakshmipathy Deenadayalan<\/strong><\/p>\n

I’m. I hope that I’m audible. So let me go one by one. See we are not extremely going higher on the ticket size. If you see the average ticket size between last year and this year it has moved from 3.5 lakh per customer to 4.2 lakh per customer. So we are still operating in the sweet spot of 3 to 5 lakhs. That is where we see the potential for higher growth and we see there is the challenges for other people to get in. So that is the sweet spot of five Star. So we will be operating in three to five lakhs.<\/p>\n

Definitely. What we have been saying three quarters before was below three lakhs. That had some bit of pain where we want to slow down in below 3 lakhs and concentrate a bit more on above 5 lakhs. So structurally 3 to 5 lakhs will be our core. Even if you see our presentation, close to 50% plus of our total AUM lies in 3 to 5 lakhs. So there is no big movement that we have made to go and go and get into the bigger ticket size customers. So we remain in the range bound of three to five. That’s our sweet spot forever and we remain there stronger.<\/p>\n

On what happened last year on the structural problem, there was no structural problems at all. As we have been seeing. The problem has come from over leverage caused by unsecured and microfinance lenders. That has also peeped into the secured lenders like five Star. So first it started as a over leverage issues. Then it translated into behavioral issues. That is where five Star was addressing the behavioral issues of our customers in last three to six months. That is getting separated now by a continuous effort that what we have been putting with the existing customers.<\/p>\n

So structurally, if you want to say what is the improvement that we have done is earlier the business and collections was together. Now the business verticals and collection vertical has been separated since from April 1 fully functional. So business team now will be focusing more on new businesses and collection team will be more focusing on stabilization in the DPDs across all the customers in Five Star. I hope so. I have broadly answered all the questions. There is some kind of disruption that we are.<\/p>\n

We are not able to hear the entire questions if any further. Any question that we have not answered, please come again.<\/p>\n

Unidentified Participant<\/strong><\/p>\n

Yeah, so the last question was structurally we have been saying, you know, the business is because of the lower base and opportunity. 25% was the growth number that we have been giving for last two, three years. Now in one of the comments, Shikant mentioned that we’ll be growing at 18 to 20% over next three years. So. So is it fair to assume that structurally our growth rates would be lower compared to what we had anticipated say three years back? Two to three years back.<\/p>\n

Lakshmipathy Deenadayalan<\/strong><\/p>\n

See when we were growing at 30% plus, our AUM size was close to 5,000 to 7,000 crores. Now we are sitting on 13,000 crores and we are coming out from a growth of 1011% for a full year. We are intend to grow at 20%. So that’s why if you see my earlier opening remarks, this will even go up as we move forward year on year. But please understand, from a current of 10 to 11% we are doubling in this financial year. Maybe we’ll be even higher growth as we go forward.<\/p>\n

Unidentified Participant<\/strong><\/p>\n

Okay, sure. And last question is on, you know, our cost to assets like because of this reorganization and slower growth this year we see some inch up in the cost to assets number. Right. Can you help us understand what should be the structural cost opex to assets from a steady state basis<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

For Q4, if you look at our OPEX to average AUM, we ended slightly higher than 7%. And this year obviously there will be some benefit of scale that will come in. But we have also made some investments in the collections vertical and there are also with competition people getting into this segment. It is also important for us to retain the right set of people by giving slightly higher cost. So our sense is I think it will largely remain around the 7 to 7.25% levels and not show any big decline during the year despite the 20% growth that we will achieve.<\/p>\n

Unidentified Participant<\/strong><\/p>\n

Okay, perfect. Thank you so much and all the very best.<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

Thank you.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. The next question comes from the line of Yuval Aya from Nuvama Institutional Equities. Please go ahead.<\/p>\n

Unidentified Participant<\/strong><\/p>\n

Thanks for taking my question. My first question was on our AUM outlook for the next year. So from the current year if we want to. I understand that there’s a low base and therefore we are confident of achieving the 20% growth. But if we look at disbursement, sir, we’ve only improved our disbursement sequentially. Before that we were declining our disbursements because of the stress that we saw on asset quality also. So we’ve seen the GNPA ratio increasing for the past several quarters. So do you look at it at this way that we go for higher disbursements to achieve that 20% growth?<\/p>\n

Only after you see some early indicators for the GNPA ratio decreasing or it won’t be contingent on that aspect sir.<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

No, we will be pushing up disbursements like we said. I think in Q4 sequentially our disbursements was higher by about 24% and you will definitely see sequential growth. See the quick back of the envelope computation is we did close to 5000 crores last year. Even if we had grown our disbursements by 15% this year that number should have been about close to 6000 crores and another is 15% will mean close to 7000 crores for FY27. But given that this year we did not push up on our disbursements, like I even said earlier, there is a bit of a pent up demand which we can definitely address and this is a segment where the demand is of the least concern because it’s a very huge market out there and we should be able to get close to about 6,500 to 7,000 crores of disbursements in the coming year.<\/p>\n

So definitely we have started looking at ways and means to bring in quality customers at the same time push our disbursements up.<\/p>\n

Lakshmipathy Deenadayalan<\/strong><\/p>\n

So just to continue that, as I said in my opening remarks, we are already seeing a very good uptick in our collections. Just to go a little deeper, for last six months we are seeing a good trend in upwards in collections. So that is why we are able to do ever best in our collections both in X bucket as well as the unique customer collection efficiency. You will see the NPA slowing down from next quarter onwards. So but that is the outcome because if current customers, ex customers forward flow is lower, eventually the arrears will be lower, eventually the NPAs will be lower.<\/p>\n

So we are seeing that trend very strongly. That’s why we are confident to say that we’ll be growing at 20%. So definitely in coming quarters you’ll see NPAs downing towards the south.<\/p>\n

Unidentified Participant<\/strong><\/p>\n

Understood sir. Thanks. And sir, My second question was on our OPEX outlook for this year. So what plans do we hold in terms of increase in headcount and brand expansion for FY27 and if there’ll be a breakup of in terms of tier 1, tier 2 etc towns for the branch expansion that will be helpful.<\/p>\n

Lakshmipathy Deenadayalan<\/strong><\/p>\n

So our endeavor is keep opening the new branches. Last year also we opened close to 90 branches. I’m happy to say that out of 90 branches 95% of my new branches break even has happened. So the infrastructure should be ready in place. That’s why we keep opening because that’s one of the important levels for growth for five star. Going closer and closer to the customer in city where we have lesser competition and very understanding the ground level reality of the customer which is more important. So our catchment area around the branches will be 25-30km.<\/p>\n

So we want to be as close to the customer whom we intend to serve. So even for this financial year we intend to open 60 to 75 branches from an operation cost. Srinath, do you want to take.<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

So like we said, I think these branches will come in and we are very confident that over a 9 to 12 month period these branches will start breaking even or becoming profitable. Which is what we said that the OPEX to AUM level we should be at about 7 to 7.25% for this year which is same as what we did in Q4 because obviously to retain our good people today we have to compensate them at the appropriate levels which would mean you’re not going to get too much of scale benefits coming in in this financial year.<\/p>\n

Unidentified Participant<\/strong><\/p>\n

Sure. Thanks a lot. Thank you.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. The next question comes from the line of Arvind Ravichandran from Sundaram Alternatives. Please go ahead.<\/p>\n

Lakshmipathy Deenadayalan<\/strong><\/p>\n

Sorry, we’re unable to hear you. Hello? Sorry, can you hear me now? Hello?<\/p>\n

Operator<\/strong><\/p>\n

Hello sir. So can you hear me? Hello?<\/p>\n

Lakshmipathy Deenadayalan<\/strong><\/p>\n

Hello. Yes<\/p>\n

Operator<\/strong><\/p>\n

Sir, we can<\/p>\n

Lakshmipathy Deenadayalan<\/strong><\/p>\n

Hear you. Yeah,<\/p>\n

Operator<\/strong><\/p>\n

Yeah. Can you hear me sir?<\/p>\n

Lakshmipathy Deenadayalan<\/strong><\/p>\n

Yes. Yeah, yeah.<\/p>\n

Operator<\/strong><\/p>\n

Thank you so much for the opportunity sir. Like you know the congratulations on the good set of numbers especially on the asset quality side, especially on the early delinquency indicators and they have mentioned you know like there will be like subsequent improvement in NPAs and all. But one question is on like you know we have built, you know so much capacity especially in the last two, three years. You know they’re telling. I mean I understand that 20 growth for FY27 but. But even beyond that like you know the capacity kind of we kind of built and we are continuously going to build like you Know, can I, can I assume that the 20% growth for the medium term, let’s say 28 or 29 would be on the consider to side rather than on the, on the, on the, on the, even the maximum that could be like maybe better than that.<\/p>\n

Better than 20%, let’s say 28 or 29. And similarly on the credit cost, like you know, if you are the statistic, credit cost is going to be this way. Like you know, should we reuse, look at our pricing also?<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

Arvind, I think Mr. Pathi did answer the first question. He very clearly said that for the medium term they are definitely going to be looking at around 20% growth. So you know, 20% is not the highest number that we are putting in. If, you know, we, if we get more confidence, we are able to, you know, sustain this level of asset quality and credit cost. We can even look at growing slightly on the higher side. So 20% is the number that we are confident of achieving and possibly we could see some upsides coming in in the years on the credit cost.<\/p>\n

Right now we are guiding you for 1.5 to 1.6%. It is based on the profile of customers that we will be onboarding during this year and thereafter. So at this point we are not saying that we are going to be onboarding much higher quality customers which means credit cost will come down if that happens and the asset quality trends a lot better. Naturally you will see credit cost being better than our guidance.<\/p>\n

Operator<\/strong><\/p>\n

Sure. Sir, there’s one more question on the yield side. Like, you know, considering our steady state credit cost itself, we are, you know, looking at a slightly higher than what we had initially anticipated. Could we look at our pricing also because you know is going to be higher at this<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

Point. Arvind, there is no necessity for us to relook at our pricing because we dropped our pricing by 200bps about one and a half years back. And if you really look at the pricing that is being given by lenders to this segment of borrowers, we would largely be on the lower end rather than on the higher end of the range. So at this point there is no issue from a pricing perspective. And it is not like we are, we have been slow on disbursements because of pricing. The slowdown in disbursements is a conscious call given the challenges that we faced.<\/p>\n

And we don’t really envisage at this point of time for any pricing drop to happen, at least in FY27.<\/p>\n

Operator<\/strong><\/p>\n

Okay, but my question was on the other side, like you know, should we look good, relocate in terms of revising upwards. But fine, thank you. So<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

I will not. We will keep evaluating it but at this point of time there is no proposal on the table to revise the pricing downwards or upwards.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. The next question comes from the line of Subranshu Mishra from Philip Capital. Please go ahead.<\/p>\n

Renish Bhuva<\/strong><\/p>\n

Hi, good morning. Two or three questions. The first part is of this disbursement that we have gotten FY26. What proportion is coming from the top up loans and what proportion is to repeat customers? Second is what is the proportion of collections which is still cash collections. And third is what, what has been the write off in FY26?<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

So Shubransha, I think the proportion of top ups and repeats continue to be at the same level. What we used to tell you is about 10 to 15% of loans are people who are running multiple loans with five star. And you will probably see similar levels from a disbursement side also which is about 10 to 12% coming in through top ups and repeats. On your second question, in terms of the cash collections we were, I think we had given this data, we are about 84% of collections that came in digital, you know, in Q4, FY26.<\/p>\n

So 16% will be in cash. And this has been gradually moving up. If you look at over the last one year we have moved this up from 80% to 84%. And if you look at the last two years we have actually moved it from about 53% to 84%. Our intent is how close can we get to about 90%. But you will always have to handle some level of cash given the profile of borrowers that you are operating in.<\/p>\n

Renish Bhuva<\/strong><\/p>\n

And what is the proportion of write off in 26?<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

You’re talking about Q4.<\/p>\n

Renish Bhuva<\/strong><\/p>\n

No, the entire FY26.<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

So FY26, our write off would have been about close to 160 crores. I can give you the exact number later but somewhere around 160 to 165 crores.<\/p>\n

Renish Bhuva<\/strong><\/p>\n

Right. And just one follow up. What is the proportion of repeat customers in the disbursement? 10 to 15% is proper. How much<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

We don’t distinguish here. Top up and repeat are pretty much, you know, we track it as a same metric. So the 10 to 15% that we are putting is a combination of top up and repeat.<\/p>\n

Renish Bhuva<\/strong><\/p>\n

Right. Thank you so much.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. The next question comes from the line of Rahul Kumar from Wakariya Fund. Please go ahead. Rahul, please go ahead with your question. And unmute your line in case if you are on mute. Since there is no response, we will move to the next participant. The next question comes from the line of Vanj Solanki from RSPN Ventures. Please go ahead.<\/p>\n

Unidentified Participant<\/strong><\/p>\n

Hello, good morning management. I hope I am audible. So I’m used to with this company. So I want to understand the process of sourcing and underwriting with a collection like I have read in many research reports and also with the other companies which I’m tracking that the below 5 lakh segment is very connector based segment and we have to select the lead from a connect person majorly. And also what is the turnaround time for our disbursement and what kind of rich profile customers we are approaching in below 5 lakh segment and 5 to 10 lakh segment.<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

See once we have a very proprietary underwriting which is based on, you know, evaluation of the character, cash flow and collateral and this is a methodology that we have perfected over the last 20 years of operating in this segment. I think we should probably get into a call separately so that we can actually take you in detail because in an earnings call it will be very unfair for us to explain all of these to the other investors and analysts who are present. So please, you have the mail IDs of Prashant and me on the presentation.<\/p>\n

Do write to us. We’ll fix up a mutual time and we’ll take you in detail through the underwriting process, the turnaround time and various aspects.<\/p>\n

Unidentified Participant<\/strong><\/p>\n

Okay, sure. And another question on if I, if I can ask here or all the question I need to ask on the offline only.<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

Let’s connect offline because you’re new to the company. I think it’ll be good for you to understand the company first before coming out with your questions. So let’s connect offline and we’ll, we’ll clarify, we’ll explain to you about the company and also clarify any queries you may have.<\/p>\n

Unidentified Participant<\/strong><\/p>\n

Okay,<\/p>\n

Operator<\/strong><\/p>\n

Thank you. The next question comes from the line of Divyansh Gupta from Latin pms. Please go ahead.<\/p>\n

Divyansh Gupta<\/strong><\/p>\n

Hi sir, couple of questions. So just wanted to understand how does the sourcing and fulfillment strategy for the more than 5 lakh ticket size differs from our let’s say existing less than 5 lakh customer profile. And does this profile that we are targeting any different?<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

No, Divyansh, the underwriting process is largely the same. Like I said, it’s based on evaluation of the character, cash flow and collateral and we look at credit bureau footprint of the customers, what kind of loans they already have. And what is the performance on those loans? So there is actually no difference between underwriting, let’s say a 5 to 10 lakh customer vis a vis a 3 to 5 lakh customer. Again like we offered to Vansh, happy to take you through the detailed underwriting process. Process over a, you know what a discussion.<\/p>\n

So please write to us in case you need any further clarifications and we’ll, we’ll be happy to take you through in detail.<\/p>\n

Divyansh Gupta<\/strong><\/p>\n

Sure. My question was actually also on the sourcing part, not necessarily underwriting, the question was sourcing channel. No, no,<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

No. Yeah,<\/p>\n

Divyansh Gupta<\/strong><\/p>\n

Got it, got it. And the second question is that we mentioned in the call that let’s say 84% customers are paying us digitally. Right. And then we want to take it to let’s say 90. The question was that if the customers are paying digitally then they start to have a digital footprint. Right. Which goes against one of the reasons, well by five Star is a better lender to those customer because they don’t have banking history Right now with they’re making digital payments, they have banking history. So does this lead to any, any, let’s say insight from any Fintech or any player coming in and think that okay, now I have some banking data these customers I can also lend maybe a small personal loan.<\/p>\n

I’m not saying same ticket size or secured loan but just the data availability does it lead to any player coming in, anything that you have seen from your data?<\/p>\n

Lakshmipathy Deenadayalan<\/strong><\/p>\n

Definitely. Whether five Star wishes or not. Now more and more digital prints have been taken by people everywhere so that is inevitable. But coming to the direct answer, yes, Fintech can take up our customers but you have to understand the need of our customers. The need of our customer is not 25,000 or 50,000 or less than a lakh. So our average ticket size today is around 4 lakhs. That’s been used for business improvement, starting a business or a home renovation or some personal in nature which is used for marriage or education or health.<\/p>\n

So first the ticket size matters a lot when five star comes into picture. Second is the tenure. The Fintechs can operate close to six to 12 months whereas we can operate at seven years period. So really the EMI becomes more thinner when they come to five star rather than going into fintech. So we never saw Fintech as our competitors ever since we have been saying because they operate for a different working capital in nature whereas five Star’s loans are morely into business constructing purpose.<\/p>\n

So the end use is completely different. They may be giving a competition to the Gold loans who are also in the similar ticket size and similar tenure. But not the loans like secured lenders like Five Star where our loans are close to four to five and 10 years are close to seven years.<\/p>\n

Divyansh Gupta<\/strong><\/p>\n

Got. Got. And just one data question in the deck we have the the split of aim that we give by cities right from let’s say last quarter it was around 1%. Now it is showing us 2%. So just a data roundup or we are let’s say putting in more effort to source higher ticket size from tier one and two cities. Because within a quarter it has optically showing a double doubling of<\/p>\n

Lakshmipathy Deenadayalan<\/strong><\/p>\n

I think in Maharashtra we have started our operations right. Maharashtra looks very promising state. So we are moving our branch network from close to 40 to 70, 80 branches in Maharashtra. So when we enter into Maharashtra we put branches in tier one and tier two. Nasik will have a branches, Pune will have a branch and Aurangabad will have a branch. Those branches have been shown in tier one and two. So that you see a little uptick in the percentage.<\/p>\n

Divyansh Gupta<\/strong><\/p>\n

And just last question. In the last year we had opened 96 branches. And let’s say that was a tough period for us from a lending perspective. Now assuming that the current collection trends hold or improve we have mentioned that we are looking to open only 60 to 75 branches. Shouldn’t we be getting more aggressive in launch in launching more branches by slow it down?<\/p>\n

Lakshmipathy Deenadayalan<\/strong><\/p>\n

No, I think predominantly in last three years our split branch mechanism and new branch mechanism has worked out very well. So in Tamil Nadu, Telangana, AP where the major chunk of branches were put in last three years have given us a right foundation and infrastructure right in place when we want to double our growth comparing to last year. So we think this financial year we’ll take a little smaller number and run with 60 to 75 branches if promising things that we see from newer states like emh, Rajasthan, Gujarat, UP Chhattisgarh, definitely we will also increase the number of counts in those locations.<\/p>\n

Divyansh Gupta<\/strong><\/p>\n

Got it? Understood. Understood. Thank you for your answers. All the best.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. The next question comes from the line of Chandrasekhar Sridhar from Fidelity International. Please go ahead.<\/p>\n

Unidentified Participant<\/strong><\/p>\n

Hi, good morning. I had a few questions. One, if you see the composition of the growth, a large chunk of the growth has come from the non south markets in the last this year on the aum just maybe you can some geographical sense around different markets. I mean AP has been notably weaker this year. Anything around that. That’s my first question. Second, you had briefly sometime in the middle of last year said that you look at affordable housing or getting to vehicles. I mean where does that fit into your scheme of things at this point in time?<\/p>\n

Maybe over the next one to two years. Third question. To get to about 20% growth, we need about 6200, 6300 crores of reimbursements, which means that we need to sort of step up to 1500, 1400, 1500 crores on the first quarter itself. Then typically it’s weak. So how do you just think of that? Fourth, just how much more is left in terms of cost of funds to drop? Obviously this quarter a lot of the borrowing happened via ecb. So the incremental borrowing was largely ecb. So that’s why we didn’t see that.<\/p>\n

But just any more medium term sense on how much more cost of fund can drop. And then the very last question is that asset quality is beginning to improve, but it’s still holding on to somewhat similar credit cost level. Is this because we’re trying to sort of up the coverage, you know, on some of the lower stages? I mean the background also has been that RBI is now prescribed a minimum floor even of 5% on stage two for banks. And our stage two coverage is lower than, you know, what the RBI description itself is.<\/p>\n

Thank you.<\/p>\n

Lakshmipathy Deenadayalan<\/strong><\/p>\n

Yeah, Chandra, good morning. Many questions at one go. So last two questions on disbursement and quality, I ask Srikanth to answer it. Going from the first question. Yes, last year definitely the non south growth was going up as I rightly said in Maharashtra, Rajasthan, Gujarat and Chhattisgarh and up. The branches were put in our portion of south to non south. Close to 85% of our AUM or even much higher will be in south where this over leverage problem started to creep in. So we had a hold on that very tightly for the first two quarters for June and September.<\/p>\n

So we put our muted growth there and started to focus more on collections as we’ve been talking for last 12 months. But having said that, next this financial year you see all the big states coming back in a big way. That’s how we see Tamil Nadu, Andhra, Telangana and of course to some extent Karnataka also because the collections are stabilizing there. Ex bucket collections in Karnataka also showed 99% in the last quarter. So for the financial year 27 it will be the growth of south for us which will predominantly give us that 20% or even little more than that.<\/p>\n

What we anticipate for the full year from South. On the second question on the products as yes, we have been introduced affordable housing in some of the locations. But our focus was mainly to get back the Microlab product back to its original growth. So that was our first option because the yields are good, the returns are good and the Runway is great there. So we will see Microlab, the sweet spot of 3 to 5 lakhs in five star kicking back in a big way in this financial year. And slowly we’ll be getting into the affordable housing product where we want our sweet spot to be around 7 to 8 lakhs.<\/p>\n

Next two years we may see even one more product getting added that maybe we can call it out little later on the asset quality and disbursement. You’re right. 1400,500 crores of disbursement has to happen. Yes Srikanth.<\/p>\n

Srikanth Gopalakrishnan<\/strong><\/p>\n

So Chandra, this is what we alluded for example last year not FY26. Even in FY25 we did about 5000 crores of disbursals for the full year which is almost at, you know, close to 425 to 450 crores on a monthly basis. And this year obviously we have consciously pulled back. So the ability to push it by 20% on the back of one year old numbers is not a challenge at all. So today you will probably see and this will give you a lot more confidence maybe post the first quarter, even the first quarter we are targeting quite strong disbursements to come in.<\/p>\n

So we don’t really see a challenge getting to about 6200 to 6400 crores of disbursements to achieve a 20% growth. See credit cost levels. Mathematically you are right. I think with asset quality improving we should start seeing benefit on the credit cost. And at this point of time there is not any tearing hurry for us to keep creating buffers on the provisions. Obviously we will continue to keep creating appropriate level of ECL on our book. Like you said, while I don’t think that is going to come to NBFC’s anytime soon because the ECL framework for bank itself is coming in only from the 1st of April 2027.<\/p>\n

So I don’t think that 5% is going to come on stage two anytime soon for the NBFCs. But just that given that we are coming off a year when we have seen some challenges, possibly we are playing a little conservative from a credit cost level. Depending on how the DPDs stack up, you could see some benefit on the credit cost line kicking in actual. And lastly to a question on the drop in cost of funds, see if you exclude the ADB borrowings that we did, our overall cost for this quarter will be somewhere around 8.25 to 8.3.<\/p>\n

And given the macroeconomic challenges, the geopolitical challenges, it is creating a little bit of uncertainty in the borrowing space. So at this point of time I would probably say we don’t expect too much of benefit to come in from cost of funds in the next financial year, but they will continue to be monitorable. So we will obviously keep pushing banks for much finer rates. Rating upgrade at least till the end of the year or maybe till the second half of the year is out of question till we start showing some benefit.<\/p>\n

So most likely I think we should be borrowing at average rates of clothes closer to 8.5 levels, which means at a book level you still have another 30, 40 basis points of cost, but that will come over the next two to three years. So if you’re borrowing at eight and a half, naturally the book has to come to about eight and a half, but it will probably take two to three years. So that much of juice could still be there in the book. But geopolitical challenges are creating some murmurs, especially on the liquidity side.<\/p>\n

We will get to know obviously in April. We have not borrowed any monies given the strong liquidity position that we are in. But we’ll get to know a little better over the next couple of months and I think we’ll be able to give you a better perspective in the next earnings call. At this point of time, we would say, I think we will largely be where we were in FY26. Yeah, FY26.<\/p>\n

Renish Bhuva<\/strong><\/p>\n

Thank you.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. We take the last question from the line of Aditya Das from Samatvam Capital. Please go ahead.<\/p>\n

Renish Bhuva<\/strong><\/p>\n

Hi, am I audible?<\/p>\n

Operator<\/strong><\/p>\n

Yes. Yes. Please go ahead with your question. Since there is no response from the participant. That brings us to the end of the question and answer session. I would now like to hand the conference over to the management for the closing remarks.<\/p>\n

Lakshmipathy Deenadayalan<\/strong><\/p>\n

Yeah. Thank you all for taking out this call with us. As we said in the opening remarks, you will see the onward and forward growth coming back to five star. And I’m happy to give a closing comment that I’m happy to share. That board has declared the same dividend what we got in last financial year. So that gives also a good positive sign to the retail shareholders. So with this positive comment, I’m thanking each and everyone who have joined this call. See you soon in the next earning call.<\/p>\n","protected":false},"excerpt":{"rendered":"

Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon. Five-Star Business Finance Ltd (NSE: FIVESTAR) Q4 2026 Earnings Call dated Apr. 29, 2026 Corporate Participants: Lakshmipathy Deenadayalan \u2014 Chairman and Managing Director Srikanth Gopalakrishnan \u2014 Joint Managing Director and Chief Financial Officer Analysts: Raghav […]<\/p>\n","protected":false},"author":2377,"featured_media":147581,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[6349],"tags":[10169,9175,9104,9092,14492,10089],"class_list":["post-182091","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-transcripts","tag-earnings","tag-earnings-call","tag-earnings-conference","tag-earnings-transcripts","tag-financial-results","tag-quarterly-earnings"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/alphastreet.com\/india\/wp-content\/uploads\/2023\/05\/Transcript-thumbnail.jpg","jetpack_likes_enabled":false,"jetpack-related-posts":[{"id":109778,"url":"https:\/\/alphastreet.com\/india\/infosys-limited-infy-q4-2021-earnings-call\/","url_meta":{"origin":182091,"position":0},"title":"Infosys Limited (INFY) Q4 2021 Earnings Call","author":"Sahil Anand","date":"April 21, 2021","format":false,"excerpt":"Infosys Limited (NYSE: INFY) Q4 2021 earnings call dated\u00a0Apr. 14, 2021 Corporate Participants: Sandeep Mahindroo\u00a0\u2014\u00a0Vice President, Financial Controller & Head \u2013 Investor Relations Salil Parekh\u00a0\u2014\u00a0Chief Executive Officer and Managing Director Pravin Rao\u00a0\u2014\u00a0Chief Operating Officer and Whole-time Director Nilanjan Roy\u00a0\u2014\u00a0Chief Financial Officer Analysts: Ankur Rudra\u00a0\u2014\u00a0JPMorgan \u2014 Analyst Diviya Nagarajan\u00a0\u2014\u00a0UBS \u2014 Analyst\u2026","rel":"","context":"In "Earnings"","block_context":{"text":"Earnings","link":"https:\/\/alphastreet.com\/india\/category\/earnings\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2021\/04\/Infosys-Limited-Q4-2021-Earnings-Call.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2021\/04\/Infosys-Limited-Q4-2021-Earnings-Call.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2021\/04\/Infosys-Limited-Q4-2021-Earnings-Call.png?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2021\/04\/Infosys-Limited-Q4-2021-Earnings-Call.png?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2021\/04\/Infosys-Limited-Q4-2021-Earnings-Call.png?resize=1050%2C600&ssl=1 3x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2021\/04\/Infosys-Limited-Q4-2021-Earnings-Call.png?resize=1400%2C800&ssl=1 4x"},"classes":[]},{"id":140464,"url":"https:\/\/alphastreet.com\/india\/deep-industries-ltd-deepinds-q3-fy23-earnings-concall-transcript\/","url_meta":{"origin":182091,"position":1},"title":"Deep Industries Ltd (DEEPINDS) Q3 FY23 Earnings Concall Transcript","author":"IRS_INDIA","date":"February 8, 2023","format":false,"excerpt":"Deep Industries Ltd (NSE:DEEPINDS) Q3 FY23 Earnings Concall dated Feb. 07, 2023. 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