Five-Star Bus.Fi (FIVESTAR)

FairStock Score: 69/100 — STEADY

Score breakdown: P/E: 3/3 · ROCE: 1/2 · Growth: 1/2 · Dividend: 0/1

Key Financials

Strengths

• ROE of 17.58% and ROCE of 16.34% show strong capital efficiency for an NBFC.
• Latest quarter net profit of ₹277 Cr on ₹815 Cr revenue implies a high ~34% net margin, indicating pricing power.
• Sales growth of 16.28% shows steady loan book demand.
• Piotroski F-Score of 7/9 suggests healthy fundamentals.
• Debt/Equity of 1.26 is reasonable for a financing business.

Concerns

• Profit growth of 7.69% lags sales growth of 16.28%, suggesting pressure on margins or rising costs.
• Free cash flow is deeply negative at -₹937 Cr, a red flag if it is not cyclical loan growth.
• Altman Z-Score of 1.67 is in the caution zone, though it is less reliable for NBFCs.
• Promoter holding of only 18.56% is low and raises governance and alignment concerns.

AI Analysis

Let me look at Five-Star Business Finance as a business: what does it earn on capital, how durable are those returns, and what am I paying. The numbers show an NBFC earning an ROE of 17.58% and ROCE of 16.34%. Good, steady returns. In the latest quarter, it earned ₹277 crore on revenue of ₹815 crore, a 34% net margin. For a lender, that margin suggests a niche where it can price and collect well. But sales grew 16.28% while profits rose only 7.69%. Profit lagging sales is a yellow flag. New loan revenue is not hitting the bottom line with the same efficiency. Credit costs may be rising, competition may be pressuring yields, expenses may be creeping. I do not know, but I must watch. The balance sheet is acceptable: debt-to-equity of 1.26 is not aggressive for an NBFC, and Piotroski score of 7/9 suggests solid fundamentals. Yet free cash flow is negative at -₹937 crore. A growing lender consumes cash to fund loans, so negative FCF alone does not kill the thesis; but if growth never turns into owners' cash, equity holders suffer. Altman Z of 1.67 is below the safety zone, though like EV/EBITDA of 261x, it is not very meaningful for an NBFC. Promoter holding of only 18.56% worries me; the captain should own more of the ship. At ₹484.80, the stock trades at 11.08 times earnings and 2.27 times book. Graham Number is ₹427.33, so margin of safety is a thin 2.38%, not the 30-40% cushion Graham wanted. Dividend yield is negligible at 0.48%. This is a decent business, but at this price I am not compensated enough. I would wait for a better price or for profit growth to catch up with revenue growth.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer