Five Star Business Finance Limited (ISIN: INE128S01021), a leading non-banking financial company, has unveiled an ambitious growth strategy aimed at achieving a 25-30% compound annual growth rate (CAGR) in its Assets Under Management (AUM). The company's plan focuses on three key pillars to drive sustainable long-term growth in the financial services sector.

Strategic Focus on South India

Five-Star Business Finance is doubling down on its stronghold in South India, leveraging its deep understanding of regional markets. This geographical focus allows the company to capitalize on its existing network and local expertise, potentially leading to more efficient expansion and risk management.

Implementation of AI-Powered Credit Analytics

In a move to enhance its underwriting capabilities, Five-Star Business Finance is set to implement advanced AI-powered credit analytics systems. This technological upgrade is expected to improve the company's ability to assess creditworthiness, potentially leading to better loan quality and reduced risk.

Maintaining High Asset Quality Standards

The company has emphasized its commitment to maintaining high asset quality standards, a crucial factor in the financial services industry. This focus on quality over quantity could help Five-Star Business Finance in building a robust and sustainable loan portfolio.

Q1 FY2026 Financial Performance

Five-Star Business Finance's recent financial results for the quarter ended June 30, 2025, reflect the company's growth trajectory:

Expansion and Operational Highlights

• Branch Network: The company added 19 branches during the quarter, bringing its total branch count to 767 across 11 states and union territories.
• Employee Base: Total headcount increased to 12,043, up from 9,358 in the previous year, supporting the company's expansion plans.

Challenges and Outlook

While Five-Star Business Finance shows strong growth, the increase in Gross Stage 3 assets ratio from 1.41% to 2.46% year-on-year suggests some challenges in maintaining asset quality. The company's focus on high asset quality standards will be crucial in addressing this trend.

As Five-Star Business Finance implements its growth strategy, the financial services sector will be watching closely to see if the company can achieve its ambitious 25-30% CAGR target while maintaining asset quality in an increasingly competitive market.

The resignation of Mr. Rangarajan Krishnan as Joint Managing Director and CEO, effective August 14, 2025, marks a significant change in the company's leadership. As he departs to pursue entrepreneurial endeavors, the company's ability to execute its growth strategy under new leadership will be a key area to watch in the coming quarters.

Five Star Business Finance , a leading non-banking finance company (NBFC), announced the resignation of Rangarajan Krishnan from his position as Joint Managing Director and Chief Executive Officer, effective August 14, 2025. Krishnan cited his desire to pursue an entrepreneurial journey as the reason for his departure after serving the company for 10 years.

Leadership Transition

The Board of Directors has accepted Krishnan's resignation, confirming that there are no other material reasons for the decision. Lakshmipathy Deenadayalan, Chairman and Managing Director, will continue overseeing the company's day-to-day operations.

Strong Q1 FY2026 Performance

Despite the impending leadership change, Five Star Business Finance reported impressive financial results for Q1 FY2026:

• Assets Under Management (AUM): Grew by 20% year-on-year to ₹124,578.00 crore
• Net Profit: Increased by 6% to ₹266.31 crore
• Total Income: Rose by 18% to ₹791.19 crore

Key Financial Metrics

Operational Highlights

• The company added 19 branches during the quarter, bringing the total branch count to 767.
• Five Star Business Finance maintained a strong capital adequacy ratio of 49.15%.
• The security cover over listed non-convertible debentures stood at 1.20 times as of June 30, 2025.

Challenges and Outlook

While the company demonstrated strong growth, there was a notable increase in Gross Stage 3 assets, rising to 2.46% from 1.41% in the same quarter last year. This increase in non-performing assets may require close monitoring in the coming quarters.

The Board expressed appreciation for Krishnan's decade-long service to the organization and wished him success in his future endeavors. As the company navigates this leadership transition, it remains focused on maintaining its growth trajectory and addressing asset quality challenges.

Five Star Business Finance continues to expand its presence in the small business loan segment, with a particular focus on southern India and emerging markets in other regions. The company's robust financial performance and strategic expansion plans position it well for continued growth, despite the upcoming change in leadership.

Investors and stakeholders will be watching closely to see how the company maintains its momentum and addresses challenges under its existing leadership structure in the coming quarters.