Buy MAS Financial Services; target of Rs 390: Motilal Oswal

Motilal Oswal's research report on MAS Financial Services

4QFY24 PAT grew ~23% YoY to INR681m (in line). FY24 PAT at INR2.48b rose ~23% YoY. PPoP stood at INR1.13b (in line) and grew 27% YoY. Operating expenses jumped ~46% YoY to INR555m, with the C/I ratio and the opex-to-AUM ratio increasing to 33% and 2.2%, respectively. Credit costs stood at INR214m, translating into annualized credit costs of 0.9% (vs. 1.1% in 3Q) MASFIN's credit rating was upgraded to CARE AA- (Stable) from CARE A+ (Positive). The company is building capabilities in the north and south regions and will look to diversify geographically over the medium term. Direct retail distribution improved to ~67%, which the management expects to increase to 70-75% over the next few years. The company has ingredients in place to deliver healthy AUM growth, maintain its margin trajectory, and keep asset quality stable, resulting in benign credit costs.

Outlook

We estimate PAT CAR of ~27% with RoA/RoE of 3%/18% in FY26. Reiterate BUY with a TP of INR390 (based on 2.7x FY26E BV).