MOSL: MAS FINANCIAL SERVICES (Buy)-Healthy AUM Growth| Spreads under pressure | Stable asset quality
MAS Financial Services: Healthy AUM Growth| Spreads under pressure | Stable asset quality
(MASFIN IN, Mkt Cap USD0.6b, CMP INR721, TP INR830, 15% Upside, Buy)
2QFY20 PBT declined 7% YoY to INR499m (23% miss), largely driven by pressure on spreads (net operating income miss of 6%) and lower tax rate advantage used for aggressive provisions (Write offs are ~INR100m for the quarter). PAT grew 35% YoY to INR467m (in-line).
- Disbursements grew 17% YoY to INR13.6b. Consol. AUM grew 6% QoQ/26% YoY to INR62b, largely driven by 47% YoY (+22% QoQ) growth in SME loans. Growth in 2Ws remains muted at 8% YoY, while AUM in CV finance has declined 8% YoY. Consequently, the share of SME loans has increased 400bp YoY to 28.5%.
- Margins declined 100bp YoY to 6.6%, driven by lower yields (down 30bp YoY to 15.4%) and increased leverage on year-on-year basis. As a result, total net income grew 10% YoY to INR947m.
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.
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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