Five-Star Business Finance Ltd Q3 FY26 – ₹12,964 Cr AUM, 16.5% NIM, PAT ₹277 Cr: Cheap NBFC or Growth Finally Slowing?

1. At a Glance – Blink and You’ll Miss the Risk

Five-Star Business Finance is that rare NBFC which makes 24–26% yield loans, still sleeps peacefully at night, and somehow trades at a P/E of ~12x while most NBFCs behave like they deserve wedding invitations from Mr. Market.
As of Q3 FY26, the company commands a market cap of ~₹13,500 Cr, with AUM at ₹12,964 Cr, growing 16% YoY, while the stock price has done the opposite—down ~32% YoY.
PAT for the quarter came in at ₹277 Cr, up a sleepy 1.1% YoY, while revenues rose 12% YoY to ₹815 Cr. ROE is a healthy 18.6%, ROA a spicy 8.2%, and NIM at 16.56% still makes banks cry quietly in the corner.

So what’s the problem?
Promoters now hold just 18.6%, PE investors have been exiting like it’s a fire drill, and growth—while still decent—has clearly shifted gears.
Is this a misunderstood compounder… or a de-rating audition tape?

2. Introduction – From Darling to Doubt

For years, Five-Star was the poster child of “secured micro-loans done right.”
While unsecured lenders played musical chairs with credit cycles, Five-Star calmly lent against land and buildings to kirana owners, small traders, and self-employed hustlers earning ₹25k–40k a month.

Between FY20 and FY24, AUM compounded at ~20.5% CAGR, margins stayed fat, NPAs behaved like obedient children, and PE investors queued up like it was a Chennai filter coffee stall.

Then reality happened.

Growth slowed from “hyper” to merely “healthy,” PE investors started selling, promoter stake fell