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Oct 06, 2017 01:44 PM IST | Source: Moneycontrol.com

MAS Financial Services’ IPO opens: Should you subscribe?

The non-banking finance company is expected to debut on bourses on Wednesday, October 18. The issue will close on October 10.

 
 
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MAS Financial Services' initial share sale offer is set to open for subscription on October 6, with a price band of Rs 456-459 per share.

Equity shares are proposed to be listed on National Stock Exchange and BSE Limited.

The non-banking finance company is expected to debut on bourses on Wednesday, October 18. The issue will close on October 10.

Motilal Oswal Investment Advisors is the sole book running lead manager to the offer while Link Intime India is the registrar.

Multiple brokerages recommend subscribing to the issue and believe the valuations are a tad on the higher side, but the company has growth potential as well.

Hem Securities | Subscribe

The brokerage house highlighted its financials and said that it had assets under management of Rs 33,325.65 million and Rs 34,517.41 million, respectively as of March 31, 2017 and June 30, 2017.

It also said that the firm covers a diversified customer demographic through its various financing products. “As of March 31, 2017 and June 30, 2017, SME loan segment represented 22.92% and 24.23%, micro enterprise loans represented 59.56% and 57.81%, two-wheeler loans represented 8.56% and 9.25%, Commercial Vehicle loans represented 3.66% and 3.54%, and housing loans represented 5.29% and 5.17%, respectively, of co’s AUM as of such dates,” the brokerage house said in a report.

Spa Research | Subscribe

The brokerage house highlighted the valuations and said that at the upper price band of INR 459 per share the company is priced at 4x FY17 BV on post dilution basis; whereas the peers are valued at 3x FY17 BV.

“Considering the superior track record of the company (~33% AUM CAGR; ~1% GNPA and consistent ROE of ~22% for last 4 years) we expect MAS financial to deploy the fresh proceeds in the similar way going ahead. The company would get a discount on the valuation front considering its smaller size; however the high growth potential and profitability should underpin high valuation,” the report added.

Angel Broking | Subscribe

The brokerage said that peers Capital First and Shriram City Union Finance are trading at 3x FY2017 book. But both the companies report moderate ROE of 11%. “At the upper end of the price band, MAS is valued at 6.85x of FY2017 book value (Pre-IPO) and on post dilution basis at 4.1x of Book value. Although valuations are on the higher side, looking at the strong and sustainable growth and ROE prospects of the company, we recommend a Subscribe,” the report added.

SMC Research

SMC Research said that on the lower end of the price band of Rs.456, the stock is priced at pre issue P/E of 32.60x on its FY17 EPS of Rs. 13.99. Post issue, the stock is priced at a P/E of 35.94x on its EPS of Rs. 12.69. “Looking at the P/B ratio at Rs. 456, the stock is priced at P/B ratio of 5.70x on the pre issue book value of Rs. 80 and on the post issue book value of Rs. 115.21, the P/B comes out to 3.96x,” the report added.

Choice Broking

At the higher price band of Rs459 per share, the share is valued at a P/ABV of 4.5(x) based on post issue adjusted book value, which is at a premium to average P/ABV multiple of its listed peers, the report added.
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