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Last Updated : Oct 05, 2017 04:53 PM IST | Source: Moneycontrol.com

Subscribe with Cautions MAS Financial services : Choice Broking

Choice Broking has come out with its report on MAS Financial services IPO , The research firm has recommended to “ Subscribe ” the IPO in its research report as on October 05, 2017.

 
 
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MAS Financial Services Ltd. (MFSL), incorporated in 1995, is a Gujarat based NBFC with business operations spread across six states and NCT of Delhi. As on Jun 30’2017, MFSL’s AUM stood at Rs 34,517.4 mn.

•The company will receive Rs2,330 mn as a fresh issue. This proceed will be used for augmenting capital base to meet the future capital requirements.

At the higher price band of Rs459 per share, MFSL’s 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.

MFSL drives major business from micro-enterprises and SME loans, while the activity in both segments has slowed down because of the implementation of GST and demonetization and thereby it would weigh on assets quality as well as on growth in the short term. Further, MFSL is small in size compared to peers and there is also probability of further deterioration in assets quality with the increase in business size.

•The company is witnessing declining trend in margin as NIM declined to 7.0% in FY17 from 10.5% in FY13 mainly due to the decline in yield on advances. Amidst the prevailing low interest rate scenario and high competition, strong improvement in margin cannot be expected.

Considering all these parameters, we are of the view that at P/ABV (x) of 4.5, the issue is aggressively priced leaving limited room for further upside. Thus, we assign ‘Subscribe with Caution’ rating to the issue.
First Published on Oct 5, 2017 03:17 pm
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