Buy MAS Financial Services; target of Rs 900: Motilal Oswal

Motilal Oswal's research report on MAS Financial Services

MASFIN’s 4QFY23 PAT rose 23% YoY to INR556m. NII grew 36% YoY to ~INR1.3b, while opex at INR381m grew 30% YoY. PPOP rose 39% YoY to INR887m. FY23 PAT grew 28% YoY to ~INR2m (PY: INR1.6b). Credit costs grew 28% QoQ to INR182m (est. INR119m). Total Covidrelated provisions stood at ~0.3% of on-book assets. 4QFY23 disbursements grew 27% YoY/12% QOQ to ~INR25b. FY23 disbursements surged 50% YoY to INR91.3b (PY: INR60.8b). Asset quality improved QoQ, with GS3/NS3 at 2.15%/1.5%. In MSME and SME lending, MASFIN is relatively better than its peers. Capital adequacy and liquidity on the balance sheet remained healthy.

Outlook

We increase our FY25E EPS by ~4% to factor in higher loan growth  Maintain BUY with a TP of INR900 (premised on 2.5x FY25E BV).