MASFIN posted 1QFY21 PAT of INR356m (7% miss). While NII was largely in-line, lower-than-expected opex (35% below est.) resulted in a 10% beat in PPoP (INR775m). Lower opex was due to a tweak in the employee cost structure toward a variable structure. The entire provisioning in 1QFY21 (INR299m v/s est. of INR200m) was toward contingent provisions for COVID-19. It stands at 1.6% of balance sheet loans. Jun/Jul’20 collections (in value terms) stood at 74%/87% (v/s 45–50% over Apr–May’20). Overall earnings and balance sheet growth are largely in line with expectations. We maintain our estimates for FY21/FY22E and expect RoA/RoE at ~3.8%/16.4%.
OutlookWe like MASFIN’s focus on profitability over growth. In this environment, growth is likely to remain muted. We largely maintain estimates. The stock trades at 3.2x/2.8x P/B of FY21/FY22E. Buy, with TP of INR810 (3.5x FY22E BV).
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