EUR 120.00 For Business Accounts Only

MOSL: MAS FINANCIAL SERVICES (Buy)-Healthy AUM growth; Asset quality stable

MAS Financial Services: Healthy AUM growth; Asset quality stable

(MASFIN IN, Mkt Cap USD0.5b, CMP INR584, TP INR745, 28% Upside, Buy)

 

• PAT grew 34% YoY to INR407m (in-line) in 1QFY20, driven by healthy AUM growth and stable asset quality, partly offset by margin compression. While operating profit missed our estimate by ~5%, lower credit costs led to in-line PAT.
• Disbursements (standalone) increased 21% YoY to INR12b. AUM grew 4.5% QoQ (+29% YoY) to INR55.8b (in-line). MEL and SME lending continued driving loan growth (+30% YoY). 2W and CV loan book declined by 2-4% QoQ, as disbursements in these segments were calibrated.
• NIM compression of 50bp YoY (calc.) restricted net income growth to 21% YoY to INR950m. Cost of funds was up sharply to 9.3% v/s 8.9% reported for FY19.
• Asset quality has been largely stable, with the gross stage 3 loans ratio at 1.4%. However, ECL stage 3 provisions were modest at ~21%.
• MAS Rural Housing Finance (subsidiary with a 58% stake) disbursements grew 26% YoY to INR250m, leading to AUM growth of 29% YoY to INR2.8b. Gross stage 3 ratio increased ~5bp QoQ/YoY to 0.4%.
• Branch expansion accelerated during the quarter (+15 to reach 93). Of the new branches, 13 were opened in the state of Gujarat, and one in MP and Rajasthan each.
• Asset quality has been largely stable with the gross stage 3 loans ratio at 1.4%. However, ECL Stage 3 provisions remain modest at 18%.