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Axis Securities Report
MAS Financial Services Ltd.'s disbursements grew by 15/5% YoY. The share of sourcing from non-banking financial company partners further fell down to 32.9% versus 37.6/34.2% YoY/QoQ.
AUM grew by 25/5% YoY/QoQ (slightly slower than our expectation of 27/6% YoY/QoQ). The MSME segment grew by 18/4% YoY with Microenterprise loans up 13/1% YoY/QoQ and SMEs up 25/8% YoY/QoQ.
In the wheels portfolio, commercial vehicles were up 101/13% YoY/QoQ and two-wheelers grew by 21/flat% YoY/QoQ. The salaried personal loans segment grew by 93/8% YoY/QoQ.
Net interest income grew by 28/7% YoY/QoQ aided by healthy AUM growth and steady margins. NIMs on on-book AUM(calculated) stood at 6.4%, flat QoQ.
Non-interest income grew by 43% YoY and de-grew by 3% QoQ. Opex continued to reflect investment trends as the company shifts towards direct distribution model. Cost-income ratio stood at 33% versus 32% QoQ.
Pre-provision operating profit grew by 27/2% YoY/QoQ. Credit costs came in lower than expected de-growing at ~17% QoQ, thereby aiding earnings growth of 23/9% YoY/QoQ. MAS continues to remain well capitalised with CRAR/Tier I at 24.1/20.3%.
Asset Quality remained stable with gross/net non-performing asset at 2.25/1.51% versus 2.23/1.48% QoQ.
We reiterate our Buy recommendation on the stock. The stock currently trades at 2.3 timesSeptember-25E book value and we value the stock at 2.8 times Sep'25E book value to arrive at a target price of Rs 380/share, implying an upside of 23% from the current market price.
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