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Five-Star Business Finance Ltd has revised the growth guidance of its assets under management (AUM) to 35 per cent for the next 2-3 years from earlier guidance of 30 per cent. The upward revision comes after the company posted a strong growth in disbursements and total assets in a seasonally-weak first quarter.
Typically June quarter tends to be muted for lenders compared to March. However, the Chennai-based non-banking finance company (NBFC) posted a 43 per cent year-on-year growth in AUM to ₹7,583 crore in April-June quarter as against ₹5,296 crore in the same quarter of the previous fiscal. Its disbursements also doubled to ₹1,132 crore on a y-o-y basis in the June quarter. “All the cylinders of business, collections and profitability and quality have been good for this first quarter of this financial year. Keeping this in mind, we are revising our growth guidance from 30 per cent to 35 per cent,” L Deenadayalan, CMD, Five-Star Business Finance Ltd, told analysts at the company’s Q1 earnings call.
Five-Star Business offers small ticket loans for small business customers like kirana shop owners, medical shops and self-employed individuals for business purposes, asset creation and other economic uses.
The company had earlier projected 30 per cent CAGR growth in AUM for next 3-5 years through a combination of branch expansion, employee addition and disbursements of loans with higher ticket size.
The company’s asset growth fell to 15 per cent levels during Covid times. However, it bounced back from December 2021. The company said the guidance has been revised as it sees continuous momentum and strong disbursement across its current geographies and newer markets.
Currently, 90 per cent of Five-Star Business’ disbursement and assets comes from the southern market. The company is planning to expand to other geographies like Madhya Pradesh, Maharashtra, Chhattisgarh, Rajasthan and Gujarat. Last year, the company added 75 branches and in the April-June quarter, it opened 13 branches.
However, the company added that 80 per cent of the new branches will come from the south. “The newer States like we had guided earlier, it’s more for us to understand these markets, but it’s not for immediate AUM growth,” it added. EoM
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