Mas Financial Services Ltd. share price target

We maintain a BUY rating on the stock with an unchanged target price of Rs 960/share (3.3x FY23E BV), implying an upside of 23% from CMP.

We value MAS at 3.3x FY23E BV and believe our target multiple reflects the superior return ratio profile and robust asset quality. We maintain a BUY on the stock and arrive at a target price of Rs. 960/share, implying an upside of 25% from CMP.

MAS Financial Services (MASFIN) reported 6% YoY higher PAT to INR365m (est. INR374m) in 4QFY21. The 14% miss on operating profit to INR575m was due to higher-than-estimated financing costs, coupled with higher operating expenses (est. 18%). Lower-than-estimated provisioning of INR75m (55% below our estimate) led to in-line PAT. It posted 20%/16%/20% decline in total income / PPOP / PAT in FY21. Overall earnings and balance sheet growth are muted due to the cautious approach adopted by the management. We cut our estimates for...

We maintain a BUY on the stock and value MAS at 3.5x FY23E BV and arrive at a target price of Rs. 1010/share, implying an upside of 18% from CMP.

We revise our rating from HOLD to BUY and revise the target price to Rs. 978. (3.4x FY23E BV).

While disbursements improved QoQ, they were still ~80% of YoY levels (in line with the management's guidance). As a result, consolidated AUM declined 4% QoQ/ 15% YoY to INR53b. The loan mix remained largely stable with the share of MSME/SME loans at 60%/31%. The share of off Balance Sheet loans declined sharply to 33% from 42% QoQ. However, the company has DA sanctions worth INR10b. Yield on loans (calc.) declined ~200bp QoQ to 13.4%. While this was offset by an 80bp decline in the CoF, overall spreads fell 130bp to 5.2%....

we expect the collection efficiency to reach pre-COVID levels in the next quarter and the disbursements would pick-up by FY22E.

MAS' AUM growth is likely to be driven by micro enterprise loans as the borrowers in this segment have seen a good pick-up in their economic activity especially in Gujarat where MAS is predominantly present.

4 June 2020 MASFIN reported 4QFY20 PAT at INR357m (69% beat due to lower-than- est. For FY20, PPoP grew 11% YoY, in line with AUM growth (flat QoQ). While PBT was flat YoY at INR2.3b, lower tax rate led to a 17% YoY growth in PAT to INR1.8b. Estimated disbursement loss of INR3.3b during the lockdown in Mar20, led to flat AUM QoQ to INR59.7b (up ~12% YoY). Due to the lockdown and lack of visibility, the company did not disburse in Apr-May20; it expects to gradually start disbursements from Jun20. The company remains extremely comfortable on capitalization (Tier I ~29%), leverage (debt to equity) of ~3x and liquidity with cash (incl. undrawn sanction) of INR14b (sufficient to service one year of debt obligations). Apr-May20 collections were ~45-50% in terms of value. We largely maintain our estimates for FY21/22E and expect R0A/RoE at ~2.

7 February 2020 MASFINs 3QFY20 PAT of INR551m (25% beat, +21% YoY) was Core business trends remained stable; disbursements have been range- bound at INR12-13b since the start of the IL&FS; crisis. Hence, AUM growth has slowed from 26% YoY in 2QFY20 to 20% YoY in 3QFY20. Total income jumped ~20% QoQ on higher upfront assignment income (up 40% QoQ to INR344m) and 6% QoQ decline in interest expense. Since the crisis, the company has taken a cautious stance on its auto and housing finance segments. While the auto finance (2W + CV) book has declined 7% YoY, the QoQ growth in the CV segment was strong at 15%. cost of funds is down ~70bp QoQ to 9.2% YoY. The share of direct assignments in total borrowings increased 200bp QoQ to 50%. Overall, the company maintained largely stable spreads at 7.1% on a YoY basis.