Company Update : MAS Financial Services Ltd By Motilal Oswal Financial Services Ltd
PPOP beat; higher credit costs lead to in-line earnings
NIM improves ~35bp QoQ; asset quality broadly stable
* MASFIN’s 4QFY25 PAT grew ~19% YoY to INR808m (in line). FY25 PAT rose ~23% YoY to INR3.1b. Net total income was up 34% YoY to INR2.3b (~5% beat), while opex at INR744m grew ~34% YoY (in line). PPoP stood at INR1.5b (5% beat) and grew 35% YoY.
* Credit costs were elevated and stood at INR427m (vs. MOFSLe of INR318m), translating into annualized credit costs of 1.4% (PQ: 1.2% and PY: 0.9%).
* GNPA (basis AUM) rose ~3bp QoQ to 2.45% while NNPA was stable at 1.6%. PCR on Stage 3 assets rose ~230bp QoQ to ~40%.
* The Board of Directors has declared a final dividend of INR0.7/share.
* CRAR stood at ~24.7%, with Tier 1 at ~22.6%.
AUM rises ~20% YoY; spreads expand sequentially
* Standalone AUM stood at ~INR121b and rose ~20% YoY. Within this, AUM of Micro-enterprise/SME/2W/CV loans rose 9%/21%/17%/31% YoY. Salaried personal loans grew ~77% YoY to ~INR10.4b.
* About 36% of the underlying assets in the standalone AUM were through partner NBFCs. The MSME segment contributed 60% to the incremental YoY AUM growth.
* Yields (calc.) rose ~5bp to ~14.8% while CoF (calc.) declined ~20bp QoQ to 9.1%. This resulted in ~25bp QoQ expansion in spreads to ~5.7%.
* NIM (calc.) expanded ~35bp QoQ to ~7.6%. Reported CoF declined ~3bp to ~9.8%.
Other highlights
* Avg. ticket size of micro-enterprise loans rose to ~INR63k (PQ: ~INR59k).
* RoTA declined ~5bp QoQ to ~2.85% in 4QFY25. HFC subsidiary:
* MAS Housing reported an AUM of ~INR7.7b, which grew ~29% YoY.
* GS3 in the HFC subsidiary declined ~2bp QoQ to ~0.95%
Valuation and view
* MASFIN’s disbursement and AUM growth momentum moderated in FY25 in the backdrop of a weak macroeconomic environment and stress in the unsecured lending segment. The company has a niche expertise in the SME segment and 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 healthy asset quality.
* Given that the company also has exposure to smaller MFIs and MSMEs in its Micro Enterprises business, it will be interesting to understand what measures have been taken by the company to shield itself from the stress in these product segments. We will look to revise our estimates following the earnings call on 2 nd May’25.
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