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

Motilal Oswal's research report on MAS Financial Services

MAS Financial Services (MASFIN)’s 1QFY24 PAT rose 23% YoY to INR573m. NII grew 30% YoY to ~INR1.4b, while opex stood at INR427m, up 23% YoY. PPOP rose 34% YoY to INR746m during the quarter. Credit costs jumped 18% QoQ to INR188m (est. INR160m). Total Covidrelated provisions stood at ~0.3% of on-book assets. Standalone disbursements grew 6% YoY to ~INR23b in 1QFY24. Asset quality was stable QoQ, with GS3/NS3 at 2.15%/1.5%. In MSME and SME lending, MASFIN performed relatively better than its peers. Capital adequacy and liquidity on the balance sheet remained healthy.

Outlook

We cut our FY24E EPS by ~3% to factor in the lower margins. Reiterate BUY with a TP of INR900 (premised on 2.5x FY25E BV).