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Motilal Oswal Reiterates 'Buy' on Five Star Business Finance

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  Published in Business and Finance on Saturday, January 17th 2026 at 15:34 GMT by moneycontrol.com
      Locales: Maharashtra, INDIA

New Delhi, January 17th, 2026 - Investment firm Motilal Oswal Financial Services remains bullish on Five Star Business Finance, reiterating its 'Buy' rating and setting a target price of INR700 per share. The continued positive outlook underscores the company's strong performance and future growth potential within the Indian lending landscape.

Five Star Business Finance, a prominent player in the gold loan sector, has steadily broadened its offerings to include business loans and loans against property. This expansion reflects a strategic move to capitalize on existing customer relationships and leverage their established presence across India. The company's core business lies in providing gold-backed loans, a market particularly relevant in a country where gold remains a significant store of value for many households.

The brokerage's confidence stems from several key factors. Primarily, Five Star Business Finance has consistently demonstrated exceptional asset underwriting capabilities. This means the company is highly skilled at assessing risk and ensuring the quality of its loan portfolio, which in turn allows them to maintain impressive margins. Unlike some competitors, Five Star's robust underwriting process minimizes defaults and maximizes profitability. The ability to maintain these margins, even in a fluctuating economic climate, is a key differentiator.

Beyond gold loans, the diversification into business loans represents a logical and synergistic expansion. Having built strong relationships with customers through the gold loan business, Five Star is well-positioned to offer additional financial products, deepening their engagement and expanding their revenue streams. This move avoids the need to acquire new customers from scratch, a significant advantage in a competitive market. The ability to cross-sell these products highlights the potential for increased profitability and customer lifetime value.

One of the most compelling metrics supporting Motilal Oswal's assessment is Five Star Business Finance's Return on Managed Assets (RoMA). Currently standing at 2.7%, this figure significantly surpasses the industry average and is a clear indicator of the company's operational efficiency and profitability. RoMA, essentially a measure of how effectively a company is generating profit from its assets, signals a superior management team and a well-managed portfolio. A higher RoMA suggests that Five Star is generating more revenue relative to the assets it holds, showcasing a significant competitive advantage.

Market Context and Future Outlook

The Indian financial services sector has experienced substantial growth in recent years, fueled by rising incomes and increasing financial literacy. While the gold loan sector specifically benefits from periods of economic uncertainty - as gold often serves as a safe haven asset - Five Star's broader lending portfolio positions them well for sustained growth irrespective of short-term market fluctuations. The expansion into business loans specifically caters to the growing demand from small and medium-sized enterprises (SMEs), a critical engine for India's economic growth.

Analysts anticipate further geographical expansion for Five Star Business Finance, penetrating underserved markets and extending their reach to a wider customer base. This expansion is expected to be facilitated by leveraging their existing infrastructure and relationships, keeping costs under control and maximizing returns.

Important Considerations & Disclaimer

While the outlook for Five Star Business Finance appears promising, potential investors should acknowledge that all investments carry inherent risks. Economic downturns, changes in regulatory policies, and increased competition could potentially impact the company's performance. Furthermore, the value of gold, which underpins a significant portion of Five Star's loan portfolio, can be volatile.

Disclaimer: This article is for informational purposes only and should not be construed as financial advice. It is essential to consult with a qualified financial advisor before making any investment decisions based on this or any other market analysis. Individual investment strategies should always be tailored to personal financial circumstances and risk tolerance.