Five-Star Business Finance Ltd is a Chennai-based non-banking financial company (NBFC) focused on providing secured business loans to micro-entrepreneurs and self-employed individuals, primarily in South India. With a strong track record of growth, disciplined underwriting, and a high return on equity, the company has emerged as a preferred financing partner for small businesses often underserved by traditional banks. Backed by strong institutional ownership and consistent profitability, Five-Star presents a compelling opportunity for long-term investors seeking exposure to India’s financial inclusion story. This article provides a fact-based outlook and realistic share price targets for each year from 2026 to 2030.
Business: Provides secured business loans (average ticket size: ₹5–10 lakh) to micro-entrepreneurs in sectors like retail, services, and small manufacturing
Geography: Operates across 14 states, with ~80% of AUM in South India
Ownership: Promoter holding at 18.56%; majority held by FIIs (52.95%) and DIIs (14.72%)
Listed: Yes – on BSE (543776) and NSE (FIVESTAR) since December 2023
Clarifications:
What does Five Star do? It’s an NBFC that lends to small business owners—not a housing finance or consumer loan company.
Is it listed? Yes – IPO opened in Dec 2023.
Market cap: ₹12,973.68 Cr (as of Jan 2026).
Is it a good long-term buy? Yes—for investors who believe in India’s MSME credit gap and financial deepening. Strong ROE, low P/E, and scalable model support long-term compounding.
Five-Star Business Finance: Key Financial Snapshot
Metric
Value
Market Capitalization
₹12,973.68 Cr
Current Share Price
₹440
52-Week High / Low
₹590 / ₹350
P/E (TTM)
11.70
P/B (TTM)
1.83
Book Value (TTM)
₹240.49
EPS (TTM)
₹37.64
ROE
18.81%
ROCE
16.34%
Dividend Yield
0.45%
Net Profit (TTM)
₹1,072.49 Cr
Operating Revenue
₹2,847.84 Cr
Advances (Loan Book)
₹11,686.79 Cr
Sales Growth (YoY)
30.46%
Profit Growth (YoY)
28.30%
Shareholding Pattern
Category
Holding (%)
Foreign Institutions (FII)
52.95%
Promoters
18.56%
Domestic Institutions (DII)
14.72%
Public (Retail)
13.76%
Others
0%
Note: Very high FII ownership reflects global confidence in its business model.
Five-Star Share Price Target Forecast (2026–2030)
Based on strong earnings growth, low valuation (P/E 11.7x), high ROE, and sector tailwinds, we project the following realistic price ranges:
Year
Target Price Range (₹)
2026
₹470 – ₹530
2027
₹510 – ₹590
2028
₹550 – ₹650
2029
₹590 – ₹710
2030
₹630 – ₹770
These targets assume:
EPS CAGR of 20–22% (supported by 28% recent profit growth)
P/E expansion from 11.7x to 14–15x by 2030 (still conservative vs peers)
Sustained ROE above 18% and asset quality (GNPA <2%)
Year-wise Breakdown
Five-Star Share Price Target 2026
Year
Target 1
Target 2
2026
₹470
₹530
Rationale: Near-term upside driven by AUM growth (>30% YoY), stable margins, and low credit costs. Current P/E of 11.7x is among the lowest in the NBFC space.
Five-Star Share Price Target 2027
Year
Target 1
Target 2
2027
₹510
₹590
Rationale: Expected benefit from geographic diversification beyond South India and digital underwriting efficiency. Strong cash flow supports balance sheet resilience.
Five-Star Share Price Target 2028
Year
Target 1
Target 2
2028
₹550
₹650
Rationale: By 2028, the loan book could exceed ₹18,000 Cr. If ROE remains above 18%, re-rating is likely.
Five-Star Share Price Target 2029
Year
Target 1
Target 2
2029
₹590
₹710
Rationale: Long-term play on India’s $1 trillion MSME credit gap. The company’s secured lending model offers downside protection.
Five-Star Share Price Target 2030
Year
Target 1
Target 2
2030
₹630
₹770
Rationale: The upper end assumes sustained 25%+ AUM growth, capital raise without dilution, and dividend initiation. Even at ₹770, P/E would be ~15x—reasonable for quality.
Strengths vs Risks
✅ Strengths
Low P/E (11.7x) with high ROE (18.8%) – rare combination
Secured lending model – low NPA risk
Strong FII backing – governance credibility
Scalable franchise in the underserved MSME segment
⚠️ Risks
Concentration risk in South India (~80% of the book)
Regulatory changes in the NBFC sector (RBI oversight)
Interest rate volatility impacts net interest margins
Low promoter holding (18.56%) may limit strategic control
Investment Suitability
Factor
Assessment
Risk Profile
Moderate (mid-cap NBFC)
Time Horizon
Long-term (5+ years)
Volatility
Moderate
Dividend/Income
Low but growing (0.45% yield)
Ideal Investor
Value investor bullish on financial inclusion and MSME credit growth
FAQs
Yes—it combines low valuation, high returns, and exposure to India’s MSME boom. Suitable for patient investors.
It provides secured business loans to micro-entrepreneurs—not housing, personal, or unsecured loans.
₹12,973.68 Cr (as of Jan 2026).
Yes—on NSE (FIVESTAR) and BSE (543776) since December 2023.
Final Verdict
Five-Star Business Finance is a high-quality, undervalued NBFC with a focused strategy, strong execution, and robust financials. Its P/E of just 11.7x and ROE of 18.8% make it a standout in the financial sector. Our 2026–2030 price targets (₹470–₹770) reflect steady, sustainable appreciation—not speculative hype. Investors should consider accumulating on dips with a 5-year horizon.
📌 Disclaimer: Price targets are estimates based on current fundamentals and sector trends. They are not investment advice. Please consult a SEBI-registered advisor before investing.
