Buy MAS Financial Services Ltd For Target Rs. 405 By Choice Institutional Equities
Key Conference Call Highlights
Guidance and Targets
* To grow AUM at 20.0–25.0% CAGR to reach INR 1.0 Tn by FY36E
* Co-lending: To remain in the range of 20–25% of AUM
* CoF: To witness decline in CoF by 15–20 bps to reach 9.20%–9.25% in the next two to three quarters
* Profitability: RoA in the range of 2.75–3.00%
* New Branches: Increase network by 30 to 35 branches in FY27E
* To scale up Housing Finance portfolio to INR 10.0 Bn in the upcoming quarter
Annual Milestones
* Consolidated AUM crossed INR 150.0 Bn milestone; while the consolidated Profit Before Tax (PBT) surpassed INR 5.0 Bn for FY26
* LOS was implemented across product verticals in FY26, with ongoing enhancements and additions of Business Rule Engines (BREs), particularly for faster processing in the 2-Wheeler Segment
Segmental Performance
* Standalone AUM grew by 18.7% YoY (+4.2% QoQ) to INR 143.4 Bn
* Across products segments, Micro Enterprise Loans (MEL) portfolio increased by 19.7% YoY to INR 57.4 Bn, SME grew by 15.8% YoY to INR 52.1 Bn, 2-Wheeler segment grew by 35.4% YoY to INR 10.6 Bn and SPL segment grew by 21.6% YoY to INR 12.7 Bn
* Growth in CV portfolio remained subdued at 10.9% YoY to INR 10.9 Bn, as the management remains cautious in extending credit due to ongoing energy crisis driven by West Asia conflict
* Sequentially, AUM growth was led by SPL (+6.6% QoQ), SME Loans (+5.8% QoQ) and 2-Wheeler Loans (+4.0% QoQ)
Net Interest Margin
* Average Yield on Loans (Calculated) improved sequentially by ~40 bps to 16.7% in Q4FY26, driven by stronger growth observed across high-yielding products including 2-Wheeler Loans and SPL, partnerships with Fintech company for SME loans
* The company may pass on incremental rate benefits to customers, which will be primarily driven by market conditions, and a clear focus of maintaining RoA in the range of 2.75–3.00%
Asset Quality
* The management aggressively wrote off ~0.1% assets, which were 90+ DPD, rather than reporting higher profitability
* It would continue to maintain higher provisions, as and when it deems fit, so as to maintain healthy provisions on the overall book Technology & ESG
* To deploy automation and drive BRE optimization across MEL. The management intends to improve efficiency and reduce overall operating expenses
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SEBI Registration no.: INZ 000160131
