MOSL: MAS FINANCIAL SERVICES (Buy)-Robust growth and healthy asset quality maintained
MAS Financial Services: Robust growth and healthy asset quality maintained
(MASFIN IN, Mkt Cap USD0.5b, CMP INR642, TP INR750, 17% Upside, Buy)
- MAS Financial Services (MASFIN) reported PAT of INR253m (+37% YoY), driven by operating profit growth (+55% YoY).
- Net income grew 50% YoY and 10% QoQ to INR735m, led by a) strong AUM growth of 5% QoQ and 33% YoY to INR36.6b (ex-housing finance portfolio) and b) NIM (calculated) improvement of 50bp/110bp QoQ/YoY to 8.2%, partially helped by capital raise.
- Micro enterprises lending (MEL), which constitutes ~62% of overall AUM, was the key driver of growth QoQ (+8%). SME growth remained flat QoQ. On a YoY basis, MEL (25%) and SME (62%) loans were the key drivers.
- On a 90dpd basis, GNPA % declined to 1.17% v/s 1.43% in 3QFY17. Provisioning cost increased to INR123m v/s INR47m a year ago and INR103m a quarter ago.
- Opex growth of 27% QoQ and 41% YoY to INR225m surprised us negatively. Opex increased due to higher advertising costs and salary increments for employees. Cost to income ratio increased to 31% v/s 26-27% in 1Q/2QFY18.
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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