Five-Star Business Finance Limited

Financial Services — Credit Services · NSE

₹507.00−₹6.25 (−1.22%)

DalalBaazaar Score

74 / 100

🟢 Good

Verdict

REASONABLE

Risk

Moderate

Driven by negative free cash flow, small-cap size, which brings sharper price swings.

In simple words: Reasonable but unspectacular business quality, with modest growth. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:46 pm

Understanding the Business

Company site ↗

The 60-second version of Five-Star Business Finance Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Five-Star Business Finance Limited operates as a non-banking financial company in India.

IndustryCredit Services

SectorFinancial Services

Annual revenue₹3,046 Cr

How does it make money?

Turns over ₹3,046 Cr a year. Of every ₹100 of sales, about ₹36 reaches shareholders as profit, with ₹57 left at the operating level before interest, tax and depreciation.

Who are its competitors?

The closest listed comparisons in its industry are BAJAJ FINANCE LIMITED, STATE BANK OF INDIA, HDFC BANK LTD, ICICI BANK LTD.. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Not assessable from these ratios

For a lender, returns on capital are shaped by leverage and funding cost rather than by pricing power, so the usual financial signature of an advantage does not apply. Judge this one on deposit franchise, cost of funds and asset quality — none of which are in this data.

Peer median ROE16.5%

What is the outlook?

9 analysts covering the stock expect revenue to grow about 19.9% and earnings to grow about 21.2% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+19.9%

Est. earnings growth+21.2%

Analysts9

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +107% while net margin moved -12% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+107%

Margin effect-12%

DalalBaazaar Score

74/ 100

Good

Weighted across six categories. Every point is explained below.

✓ Beta of 0.58 — historically steadier than the index
✗ Small Cap: thinner liquidity and sharper drawdowns are normal
✓ Profits have been consistent from year to year
✗ Negative free cash flow means dependence on external funding

Quality vs. Valuation

Company Quality

76/ 100

Good

How good the business is, ignoring the share price entirely.

Valuation

81/ 100

Cheap

What you are being asked to pay, ignoring how good the business is.

A good business currently available at an undemanding price — the combination this framework is built to look for.

Historical Valuation

Current P/E

13.6x

3Y Median

25.1x

40 monthly readings · mean 24.1x · range 9.7x–38.7x

Sector Median

17.0x

median of 4 sector peers

🟢Current valuation is approximately 46% below its 3y median of 25.1x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 20% below the peer median of 17.0x.

vs. its own history

Cheap

25.1x median over 40 months · -46%

vs. sector peers

Cheap

17.0x median of 4 peers · -20%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

12.4x

PEG

0.61

What's Good / What's Bad

🟢 What's Going Well1

Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

1 item require attention · 1 watch

🟡Margins are compressingFinancial
EBITDA margin is down 4.7 points over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Priced below its own history
The stock trades 46% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Cheaper than its peers
It trades 20% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 61.6% to 57.0%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Size brings its own risk
Small Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 21% a year✓ 27.5% CAGR
Latest reported year was 8.0%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 55%✓ 57.0%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Return on equity stays above 13%✓ 14.9%
For a lender this is the cleanest single read on whether the book is being grown profitably.
4Valuation vs its own median of 25.1x✓ 13.6x today
A re-rating above its own history needs a reason; without one it is just a higher price.

Investment Checklist

7 / 12 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

2 good · 8 neutral · 1 weak

Market Cap

₹14,966 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

13.6x

Cheap

Cheap against the generic band

P/B Ratio

2.03x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹37.39

Profitable

Profitable on a per-share basis

ROE

14.9%

Moderate

Moderate capital efficiency

ROCE

11.8%

Moderate

Moderate return on the capital in the business

Debt/Equity

1.12x

Moderate

Moderate leverage

Revenue Growth (YoY)

8.0%

Modest

Modest growth

Profit Growth (YoY)

1.8%

Modest

Slow profit growth

Dividend Yield

0.39%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

-₹290 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

P/E (Forward)

10.1x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

59.1%

Good

Healthy core-business profitability

Net Margin

47.8%

Good

Strong bottom-line conversion

Current Ratio

1.61

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.58

Defensive

Steadier than the market

52W Range Position

52%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

515.4 / 526.4

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

42.9

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹1,470 Cr	₹2,078 Cr	₹2,706 Cr	₹3,046 Cr	+27.5%
EBITDA	₹906 Cr	₹1,174 Cr	₹1,564 Cr	₹1,735 Cr	+24.2%
EBITDA Margin	61.6%	56.5%	57.8%	57.0%	—
PAT (Net Profit)	₹603 Cr	₹836 Cr	₹1,072 Cr	₹1,099 Cr	+22.1%
EPS	₹20.49	₹28.39	₹36.5	₹37.25	+22.0%
ROE	13.9%	16.1%	17.0%	14.9%	—
ROCE	12.4%	11.5%	12.2%	11.8%	—
Total Debt	₹4,247 Cr	₹6,316 Cr	₹7,922 Cr	₹8,200 Cr	+24.5%
Free Cash Flow	-₹1,135 Cr	-₹2,145 Cr	-₹1,128 Cr	-₹290 Cr	—

🟢 Revenue has grown at 27.5% a year over 3 years.

🟢 EBITDA has grown at 24.2% a year over 3 years.

🔴 EBITDA Margin has fallen from 61.6% to 57.0% over 3 years (-4.7 pts).

🟢 PAT (Net Profit) has grown at 22.1% a year over 3 years.

🟢 EPS has grown at 22.0% a year over 3 years.

🟡 ROE has held roughly flat at 14.9% over 3 years.

🟡 ROCE has held roughly flat at 11.8% over 3 years.

🔴 Total Debt has grown at 24.5% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹15,790 Cr

Total Liabilities

₹8,410 Cr

Cash & Equivalents

₹1,618 Cr

Operating Cash Flow

-₹264 Cr

Capex

-₹26 Cr

Shareholding (proxy)

Institutional Holding

48.1%

Insider Holding

26.3%

Corporate Actions

Dividend Rate

₹2

Ex-Dividend Date

31 Jul 2026

Analyst Consensus

Recommendations

10 Buy · 0 Hold · 0 Sell

Target Price (Mean)

₹681.1

+34.3% vs CMP

Target Range

₹630 – ₹746

Peer Comparison

Company	P/E	ROE
BAJAJ FINANCE LIMITED	30.2x	17.8%
STATE BANK OF INDIA	10.3x	15.2%
HDFC BANK LTD	15.9x	13.8%
ICICI BANK LTD.	18.1x	16.5%

Recent News

1 mixed5 general

Five-Star Business Finance extends Vijayaraghavan's CCO tenure for three years

scanx.trade, 18 Oct

Five-Star Business Finance Share Price news on latest slide

Univest, 29 Sept

Five-Star Business Finance Limited (NSE:FIVESTAR) Just Reported Yearly Earnings: Have Analysts Changed Their Mind On The Stock?

Simply Wall Street, 02 MayAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Stock to buy today: Five-Star Business Finance (₹543.75) – BUY

BusinessLine, 16 Sept

Five-Star Business Finance Ltd. Key Financial Ratios – Valuation, Profitability & More

Value Research, 29 Aug

Buy Five Star Business Finance; target of Rs 600: Motilal Oswal

Moneycontrol.com, 23 Jun

Watch Items

This is a financial-sector business: borrowing is its raw material, not leverage in the usual sense. Debt/Equity and ROCE here aren't comparable to a manufacturer's — read them alongside NIM, GNPA and capital adequacy from the company's own disclosures.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongBusiness Quality · Financial Health · Profitability · Valuation

MiddlingGrowth · Risk

Points for each in the Score ↑

Attractive on both counts

A good business currently available at an undemanding price — the combination this framework exists to look for. The work left is qualitative: whether the advantage the numbers imply is one you can identify and expect to last.

All 4 tripwires holding · see Key things to watch ↑