MAS Financial Services Q1 Results Review - Earnings Inline; Asset Quality Stable Sequentially: Motilal Oswal

Motilal Oswal Report

MAS Financial Services Ltd.’s Q1 FY24 profit after tax rose 23% YoY to Rs 573 million. Net interest income grew 30% YoY to ~Rs 1.4 billion, while opex stood at Rs 427 million, up 23% YoY. Pre provision operating profit rose 34% YoY to Rs 746 million during the quarter.

Credit costs jumped 18% QoQ to Rs 188 million (our estimate: Rs 160 million). Total Covid related provisions stood at ~0.3% of on-book assets. 

Standalone disbursements grew 6% YoY to ~Rs 23 billion in Q1 FY24.  Asset quality was stable QoQ, with gross stage-III/net stage-III at 2.15%/1.5%.

In micro small and medium enterprise and small and medium enterprise lending, MAS Financial performed relatively better than its peers.

Capital adequacy and liquidity on the balance sheet remained healthy. We cut our FY24E earnings per share by ~3% to factor in the lower margins. 

Reiterate 'Buy' with a target price of Rs 900 (premised on 2.5 times FY25E book value).

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