Five-Star Business Finance Limited reported a standalone net profit of ₹271.4 crore for Q1FY27, marking a 1.9% year-on-year increase from ₹266.3 crore in Q1FY26. The NBFC achieved its highest-ever quarterly disbursements at ₹1,496 crore, up 16% YoY and 23% sequentially, driving Assets Under Management (AUM) growth of 10% to ₹13,722 crore. This operational momentum offset slight margin compression, as the company navigated higher employee costs while maintaining robust collection efficiency. The unaudited financial results were formally published in the English newspaper Financial Express and the Tamil newspaper Makkal Kural on July 26, 2026, as per regulatory requirements.

The Board of Directors, meeting on July 25, 2026, approved the unaudited financial results reviewed by Statutory Auditors M/s Deloitte Haskins & Sells under Regulation 33 and Regulation 52 of the SEBI LODR Regulations. The audit firm issued an unmodified limited review report. Additionally, the Board submitted the security cover certificate for non-convertible debentures as per Regulation 54(2) and 54(3) of the SEBI LODR Regulations. The company also appointed Mr. Sreeram Ranganathan Iyer as an Additional Director in the capacity of Non-Executive Independent Director, effective July 25, 2026, subject to shareholder approval at the upcoming Annual General Meeting scheduled for August 31, 2026.

Key Financial Metrics

The following table summarizes the key financial performance indicators for the quarter:

Total revenue from operations grew 5.4% to ₹828.9 crore, primarily supported by a rise in interest income to ₹807.6 crore from ₹764.7 crore in the prior year quarter. Fees and commission income also increased to ₹13.6 crore from ₹9.6 crore. However, total expenses rose 9.1% to ₹476.8 crore, largely due to higher employee benefit expenses of ₹188.9 crore compared to ₹156.1 crore in the previous year. Impairment on financial instruments stood at ₹61.8 crore, up from ₹47.8 crore YoY.

Operational Highlights and Asset Quality

Chairman & Managing Director Lakshmipathy Deenadayalan highlighted that Q1FY27 represents a positive beginning to the fiscal year, underpinned by strong traction in disbursements and stabilization in collections. Unique customer collection efficiency (excluding NPAs) remained strong at 97.9%, compared to 98.1% in Q4FY26. X-bucket collections stood at 99.2%, reflecting sustained repayment discipline. The slippage ratio remained steady at 0.70%, similar to Q4FY26, while credit cost improved to 1.85% of average AUM from 1.88% in the preceding quarter.

The table below captures key asset quality metrics:

Gross Stage 3 Assets increased marginally to 3.46% from 3.37% in Q4FY26 and 2.46% in Q1FY26. Net Stage 3 Assets rose to 2.10% from 2.00% in Q4FY26. Total ECL provisions stood at ₹244 crore (excluding inter-corporate deposits), translating to 1.78% of overall AUM. The debt-equity ratio improved to 1.03 from 1.11, signaling a stronger capital base.

Funding and Liquidity

The company availed incremental debt of ₹450 crore during the quarter at an all-inclusive cost of 8.33%. The cost of funds on the overall borrowing book eased sequentially to 8.80% from 8.95% in Q4FY26, a reduction of 15 basis points, despite uncertain liquidity conditions. Total borrowings, including debt securities, stood at ₹7,866 crore as of June 30, 2026. The company maintained liquidity of ₹1,847 crore, resulting in a liquidity coverage ratio of 296%. Net Interest Margin (NIM), computed as a percentage of Average AUM, remained stable at 19.97%, down slightly from 20.07% in Q4FY26.

What the Numbers Show

While revenue growth remained healthy at 5.4%, the net profit margin contracted slightly to 32.36% from 33.66% in Q1FY26. This divergence indicates that cost pressures, particularly in employee benefits and impairments, outpaced top-line gains. However, the significant improvement in disbursement volumes (+23% QoQ) and AUM growth (+10% YoY) suggests that the company is successfully scaling its portfolio. The stabilization of credit costs and steady slippage ratios indicate that asset quality remains manageable despite the marginal rise in Stage 3 assets. The reduction in cost of funds supports future margin expansion if yield trends stabilize.

Five-Star Business Finance Limited has issued a formal communication to shareholders detailing the Tax Deducted at Source (TDS) and withholding tax protocols for its final dividend of ₹2.00 per equity share. The Board of Directors recommended the payout during its meeting on April 28, 2026, for the financial year 2025-26. This notification is critical for investors seeking to optimize their net dividend receipts, as failure to submit requisite documentation by the specified deadline will result in tax deduction at higher statutory rates.

The company’s Annual General Meeting (AGM), where shareholders will vote to approve the dividend, is scheduled for Monday, August 31, 2026. Eligibility for the dividend is determined by the record date of Friday, July 31, 2026. If approved at the AGM, the final dividend will be paid to eligible members on or before September 29, 2026. Under the Income-tax Act, 2025, as amended by the Finance Act, 2026, dividend income is taxable in the hands of the shareholder effective from April 1, 2020.

Shareholders are required to update their records, including Permanent Account Number (PAN), bank account details, and residential status, with their depository participants or the Registrar and Share Transfer Agent (RTA), KFin Technologies Limited. For resident individuals, TDS is exempt if the total annual dividend does not exceed ₹10,000. In other cases, a standard rate of 10% applies. However, if PAN is not registered or is not linked with Aadhaar, the TDS rate rises to 20%, plus applicable surcharge and cess, as per Section 397(2) of the Act.

TDS Rates for Resident Shareholders

Non-resident shareholders face a default withholding tax of 20% plus surcharge and cess. However, they may avail lower rates under Double Tax Avoidance Agreements (DTAA) by submitting a Tax Residency Certificate, Form 41, and relevant self-declarations. The company emphasizes that it is not obligated to apply beneficial DTAA rates unless the submitted documents are complete and satisfactory.

Key Deadlines and Compliance

The last date for receiving filled-in forms and exemption certificates is Monday, August 10, 2026, by 11:59 p.m. IST. Shareholders must upload these documents exclusively through the RTA’s online portal. Incomplete or unsigned forms will be rejected, leading to tax deduction at the highest applicable rate. Investors can claim refunds for excess tax deducted by filing returns with their respective tax authorities.

What the Numbers Show

The strict adherence to the August 10 deadline highlights the operational rigor required for dividend distribution under the new tax regime. With a dividend of ₹2.00 per share, the absolute tax impact varies significantly based on investor category. For instance, a resident individual receiving exactly ₹10,000 pays zero tax, whereas a non-resident without DTAA documentation loses 20% of the gross amount immediately. This bifurcation underscores the importance of timely KYC updates and document submission to preserve yield.