Company Update : MAS Financial Services by Motilal Oswal Financial Services Ltd
Earnings in line with stable asset quality; AUM rises ~20% YoY
NIM expanded ~10bp QoQ
* MASFIN’s 1QFY26 PAT grew ~19% YoY to INR839m (in line).
* Fee income rose ~55% YoY to ~INR300m. Net total income (NTI) was up 36% YoY to INR2.4b (in line), while opex at INR827m grew ~46% YoY (8% higher than MOFSLe). PPoP stood at INR1.5b (in line) and grew 31% YoY.
* Credit costs were at similar levels as the last quarter and stood at INR424m, translating into annualized credit costs of 1.4% (PQ: 1.4% and PY: 0.9%).
* GNPA (basis AUM) rose ~5bp QoQ to 2.5%, while NNPA was stable at 1.6%. PCR on Stage 3 assets rose ~1pp QoQ to ~41%.
* CRAR stood at ~25.2%, with Tier 1 at ~23.2%.
AUM grows ~20% YoY; asset quality broadly stable
* Standalone AUM stood at ~INR125b and rose ~20% YoY/3% QoQ. Within this, AUM of Micro-enterprise/SME/2W/CV loans rose 11%/20%/30%/18% YoY. Salaried personal loans grew ~92% YoY to ~INR11.3b.
* About ~35% of underlying assets in the standalone AUM were through partner NBFCs. The MSME segment contributed 60% to the incremental YoY AUM growth.
* Yields (calc.) were largely stable QoQ at ~14.85%, while CoF (calc.) rose ~20bp QoQ to 9.3%. This resulted in ~20bp QoQ contraction in spreads to ~5.5%.
* NIM (calc.) expanded ~10bp QoQ to ~7.7%, while reported CoF was stable QoQ at ~9.8%.
Other highlights
* The average ticket size of micro-enterprise loans rose to ~INR66k (PQ: ~INR63k).
* RoTA was largely stable QoQ at ~2.85% in 1QFY26.
* MASFIN Insurance Broking Pvt Ltd, a subsidiary of MAS Financial, has received in-principle approval from IRDAI to operate as a Direct Insurance Broker (Life & General), subject to compliance with IRDAI regulations and final conditions. HFC subsidiary
* MAS Housing reported AUM of ~INR7.7b, which grew ~27% YoY.
* GS3 in the HFC subsidiary declined ~2bp QoQ to ~0.92%.
Valuation and view
* MASFIN reported in-line earnings for 1QFY26, supported by strong disbursement growth of ~17% YoY, which resulted in AUM growth of ~20% YoY. Asset quality remained largely stable, while credit costs continued to remain elevated at 1.4%. The company has a niche expertise in the SME segment and maintains asset quality that is the best among (M)SME lending peers.
* The company is well-placed to achieve its target AUM CAGR of 20%, supported by robust liability management, a strong capital base, and healthy asset quality. We will look to revise our estimates following the earnings call on 24th Jul’25.
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