Nomura has maintained a ‘Buy’ rating on Five Star Finance with a target price of Rs 870, citing the company’s strong fundamentals and ability to navigate the credit cycle. While AUM growth has moderated to 25% year-on-year, driven by softer disbursement trends, Nomura remains confident in the company’s long-term growth prospects.
The brokerage notes that while asset quality has deteriorated, with GNPA and NNPA inching higher, credit costs have remained stable quarter-on-quarter. This stability reflects the company’s prudent risk management practices and focus on maintaining a healthy loan portfolio. Nomura also highlights that reported margins have contracted quarter-on-quarter, but the company’s cost ratios remain healthy, supporting overall profitability.
Nomura believes that Five Star Finance is well-positioned to capitalize on emerging opportunities in the financial sector, driven by its strong brand, robust distribution network, and focus on underserved segments. The brokerage expects the company to continue delivering strong financial performance, making it a compelling investment in the NBFC space.
