FIVESTAR Q2 FY27 Results Analysis: GNPA Rises to 3.48%, PAT Growth Flattered by Tax Reversal

FIVESTAR's Q2 FY27 numbers came in soft, with revenue of Rs. 875.03 Cr (+8.50% YoY) and PAT growth of +4.61% YoY. Here's a quick read of what worked, what to watch, and what management said.

Quarter Snapshot

Q2 FY27 delivered 8.50% YoY total income growth and 12.90% NII growth aided by a 6.83% YoY fall in finance costs, but the quarter missed management's own guidance on four metrics: GNPA rose for a third consecutive period to 3.48%, credit cost (1.84% H1 proxy) and opex/AUM (7.48%) sit above their guided bands, and ROA (7.14% proxy) is below the 8.25-8.5% target. Reported H1 PAT growth of 3.31% is flattered by a Rs.18.75 Cr tax-provision reversal; normalized H1 PAT was flat YoY. Balance sheet strength remains a clear positive with CRAR at 48.69%, LCR at 300%, and net debt repayment of Rs.222.26 Cr in H1.

Key Investment Insights

Key Positives

• NII grew 12.90% YoY to Rs.707.34 Cr, outpacing total income growth of 8.50% as finance costs fell 6.83% YoY
• Gross loans rose 10.82% in H1 to Rs.14,390.12 Cr, annualizing to ~22% and tracking the guided ~20% FY27 AUM growth
• Fees and commission income grew 63.93% YoY to Rs.18.41 Cr
• D/E improved to 1.01x from 1.11x with net repayment of Rs.222.26 Cr of borrowings in H1
• LCR rose to 300% from 258% at March 2026; CRAR at 48.69%
• Q2 PAT grew 10.28% QoQ to Rs.299.32 Cr; EPS Rs.10.14 vs Rs.9.19 in Q1

Risk Factors

• GNPA rose for the third consecutive period to 3.48% (filing basis) vs 3.37% at Mar-26, contradicting management's Q4 FY26 guidance of a decline starting Q1 FY27
• H1 credit cost proxy of 1.84% is above the guided 1.7-1.75% band; H2 run-rate needs to fall to ~1.61-1.66% to meet FY27 guidance
• Opex grew 38.58% YoY and 10.18% QoQ, outpacing revenue growth of 8.50% YoY; opex/AUM proxy of 7.48% exceeds the 7-7.25% guided band
• PPOP grew only 1.42% YoY and PBT declined 1.87% YoY; normalized H1 PAT was flat (-0.09% YoY) after excluding the Rs.18.75 Cr tax-provision reversal
• ROA proxy of 7.14% is below the guided 8.25-8.5% FY27 band
• CFO was negative Rs.770.69 Cr in H1, roughly double the Rs.326.30 Cr outflow in H1 FY26