At a Glance
This Chennai-based NBFC has quietly turned secured micro-lending into a ₹22,000 Cr listed monster. With 33% profit CAGR, 50% financing margins, and <2% GNPA — it’s like a credit machine that forgot to distribute its spoils. The only thing missing? A reason to share the profits.
1. 🚨 TL;DR
- Revenue (FY21 → FY25): ₹1,050 Cr → ₹2,848 Cr ✅
- Net Profit: ₹359 Cr → ₹1,072 Cr ✅
- 5Y Profit CAGR: ~33% — textbook compounding
- ROE / ROCE (FY25): 18.6% / 16.3% 🟢
- NPA Levels: Gross at 1.79% — incredibly clean
- P/E Ratio: ~20x — fair for a growth-focused NBFC
- Fair Value Range (FY26E): ₹800 – ₹900
- Verdict: Profitable, niche, under-leveraged. Dividend? Never heard of her.
2. 💼 Business Model: Lending to the Unbanked, Secured with Bricks
Five-Star operates in a unique segment:
- Target Customer: Self-employed, informal sector entrepreneurs (kirana shop owners, tea vendors, small traders)
- Loan Type: Small ticket (₹1–10 lakh), secured by residential property
- Avg Loan-to-Value: ~40% — highly conservative
- No Liquidity Risk: NBFC-ND-SI, so no public deposits
It’s like the HDFC of India’s unorganized economy — except more cautious, and way more profitable.
3. 📈 Financial Performance: Clean, Consistent, and Quietly Dominant
💰 Revenue:
- FY21: ₹1,050 Cr
- FY22: ₹1,254 Cr
- FY23: ₹1,521 Cr
- FY24: ₹2,183 Cr
- FY25: ₹2,848 Cr
~29% revenue CAGR — a rare NBFC with compounding + quality.
🧮 Net Profit:
- FY21: ₹359 Cr
- FY22: ₹454 Cr
- FY23: ₹604 Cr
- FY24: ₹836 Cr
- FY25: ₹1,072 Cr ✅
Every year, profits grew. And still, zero dividend.
💹 Operating Margins:
- Financing Margin: ~51% — among the highest in Indian NBFCs
- Cost-to-income ratio: Under control, improving over time
This is what happens when you don’t burn money on fintech parties.
4. 🧾 Asset Quality & Leverage: Boring is Beautiful
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Gross NPA | ~1.2% | ~1.6% | 1.79% |
| Net NPA | <1% | <1% | <1% |
| ROE | 15% | 18% | 18.6% |
| ROCE | 15.3% | 16% | 16.3% |
| Book Value/Share | ₹175 | ₹194 | ₹214 |
| Capital Adequacy | Healthy | Healthy | Healthy |
Leverage is climbing slowly, but still far from alarming.
5. 🧍 Ownership & Promoter Drama (or Lack Thereof)
- Promoter Holding: DOWN from 34.9% → 21.5% 😬
- FIIs: UP from 6.5% → 58.8% 🔥
- DIIs: Holding ~9%
- Public: Down to 10.6%
FII takeover? Pretty much. The promoter exit + no dividends = clear sign: this is an institutional baby now.
6. 💳 Peer Comparison: Small Size, Big Punch
| Company | FY25 Profit | ROE | P/E | GNPA |
|---|---|---|---|---|
| Bajaj Finance | ₹18,000 Cr | 18% | 33x | <1% |
| Shriram Finance | ₹8,500 Cr | 16% | 15x | 6% |
| Muthoot Finance | ₹3,500 Cr | 14% | 20x | ~3% |
| Five-Star Finance | ₹1,072 Cr | 18.6% | 20x | 1.79% ✅ |
No fintech noise. No gold risk. Just plain, predictable micro-loans.
7. 💸 Valuation & Fair Value Range
Current Price: ₹744
FY25 EPS: ₹36.43
Forward EPS (FY26E): ₹44–46 (conservative)
P/E Band: 18x – 20x (fair for consistency + low NPA)
👉 Fair Value Range: ₹800 – ₹900
Low volatility, decent growth, and a proven niche — but some rerating depends on them either giving dividends or scaling beyond South India.
🧠 Final Take: Five-Star Compounder With a Two-Star Payout Policy
This is a compounding machine — and it doesn’t need flashy ads or unsecured books to prove it. But:
- No dividend
- No promoter skin in the game
- FIIs call the shots now
So while the business is great, the stock’s story may need a bit more glitter to excite retail investors.
If you want a clean, low-NPA, South India-focused compounding NBFC — this might just be your 20-year hold.
Just don’t expect a party. Or a payout.
✍️ Written by Prashant | 📅 19 June 2025
🏷️ Tags
Five-Star Business Finance, NBFC India, Micro Loans, Secured Lending, South India Finance, High ROE Stocks, Indian Financials 2025, Five Star Stock Analysis, EduInvesting NBFC Recap, Low NPA Stocks, Dividend Avoiders, FII Owned Stocks, Lending to MSMEs, Compounding Stocks India, Financial Sector Insights
