Motilal Oswal - MAS Financial Services (MASFIN) MOSL: MAS FINANCIAL SERVICES (Buy)-Business trends stable, outlook positive

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Motilal Oswal

Alpesh Mehta

MOSL: MAS FINANCIAL SERVICES (Buy)-Business trends stable, outlook positive

MAS Financial Services: Business trends stable, outlook positive

(MASFIN IN, Mkt Cap USD0.4b, CMP INR485, TP INR650, 34% Upside, Buy)

MASFIN’s consol. PAT grew 45% YoY to INR355m (10% beat), driven by strong revenue growth (5% beat) and steady asset quality.
Standalone AUM increased 33% YoY to INR46.3b, driven by 39% YoY growth in micro-enterprise loans to INR29.2b. MEL now comprises 63% of total loans v/s 60% a year ago. Management expects the product mix to remain largely stable, going forward.
Margins shrank 20bp YoY, leading to 24% YoY NII growth. However, operating leverage (opex up only 12% YoY) drove 28% YoY PPoP growth.
Management commented that the company has a strong pipeline sanction from banks – enough to last a few quarters. Incremental cost of funds is up 75bp to 9.25-9.5%. Guidance remains unchanged – consol. AUM of INR52b and PBT of INR1.9b for FY19.
Asset quality has been largely stable – GNPL ratio increased by 20bp YoY to 1.4%, but NNPL ratio was stable at 0.97%.

02/11/2018 10 EN

Underlying

MAS Financial Services

MAS Financial Services Limited is an India-based non-banking financial company. The Company is engaged primarily in the business of Financing and all its operations are in India only. The Company is focused on fulfilling the requirements of lower income and middle-income groups of the society. The Company offers various products, such as Micro Enterprise Loan (MEL); Two Wheeler Loan; Small and Medium Enterprises Loan; Commercial Vehicles Loan; Used Car Loan, and Tractor Loan. The Company's Small and Medium Enterprises Loan includes Machinery Loan, Industrial Shed Loan, Working Capital Loan and Loans against Property (LAP). A micro-enterprise under this loan category is usually a small business with a turnover ranging from 25 Lakhs to 2 Crores, engaged into manufacturing, trading or services. The Company's network has over 70 branches in major cities of Gujarat, Maharashtra, Rajasthan, Madhya Pradesh, Tamil Nadu and Karnataka, through which over 3200 centers are catered.

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INE348L01012 National Stock Exchange of India India

Provider

Motilal Oswal

Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.

Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.

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Analysts

Alpesh Mehta

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MOSL: MAS FINANCIAL SERVICES (Buy)-Business trends stable, outlook positive

MOSL: MAS FINANCIAL SERVICES: Regains its mojo with healthy disbursements and stable asset quality

MOSL: MAS Financial Services (Buy)-Growth slows down, but profitability improves

MOSL: MAS FINANCIAL SERVICES (Buy)-Healthy AUM Growth| Spreads under pressure | Stable asset quality

MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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