Company Update : MAS Financial Services Ltd By Motilal Oswal Financial Services Ltd
Earnings in line; minor deterioration in asset quality
AUM up ~21% YoY; credit costs slightly elevated
* MASFIN’s 3QFY25 PAT grew ~25% YoY to INR781m (in line). Net total income was up 31% YoY at INR2.1b (in line), while opex grew ~44% YoY to INR673m (in line). PPoP grew 25% YoY to INR1.4b (in line).
* Provisions stood at INR332m (est. INR300m), translating into annualized credit costs of 1.2% (PQ: 1% and PY: 1.1%).
* GNPA/NNPA ratios (basis AUM) rose ~5bp each QoQ to 2.4%/1.6%. PCR on Stage 3 assets declined ~120bp QoQ to ~38%.
* The board has approved an investment of up to INR150m in its subsidiary, MAS Rural Housing & Mortgage Ltd.
* CRAR stood at ~25.3% with Tier-1 of ~23.1%.
AUM rises 21% YoY; sequential expansion in spreads
* Standalone AUM rose ~21% YoY to ~INR117b. AUM of micro-enterprise/ SME/2W/commercial vehicle loans grew 8%/24%/21%/47% YoY. Salaried personal loan grew ~69% YoY to ~INR9.2b. ~35% of the underlying assets in the standalone AUM were through partner NBFCs. The MSME segment contributed 60% to incremental YoY AUM growth.
* Yields (calc.) rose ~10bp to ~14.8%, while CoF (calc.) declined ~5bp QoQ to 9.3%. This resulted in ~15bp QoQ expansion in spreads to ~5.5%.
* NIM (calc.) expanded ~10bp QoQ to ~7.25%. Reported CoF was stable QoQ at ~9.85%.
Other highlights
* Avg. ticket size of micro-enterprise loans increased sequentially to ~INR59k (PQ: ~INR54k).
* RoTA declined ~10bp QoQ to ~2.9% in 3QFY25. HFC subsidiary:
* MAS Housing reported AUM of ~INR7b, up ~29% YoY.
* GS3 increased ~3bp QoQ to ~0.95%.
Valuation and view
* MASFIN has a niche expertise to serve the MSME market and continues to demonstrate healthy loan growth momentum, while its asset quality is perhaps 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 a healthy asset quality.
* Given that the company also has exposures to smaller MFIs in its micro enterprise business, it will be important to understand what measures have been taken by the company to shield itself from the stress in the microfinance sector. We may revise our estimates after the earnings call on 30th Jan’25.
For More Research Reports : Click Here
For More Motilal Oswal Securities Ltd Disclaimer
http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html
SEBI Registration number is INH000000412
