Buy Mas Financial Services, target price Rs 655: HDFC Securities

HDFC Securities has buy call on Mas Financial Services with a target price of Rs 655. The current market price of Mas Financial Services Ltd. is Rs 553.3. Time period given by analyst is six months when Mas Financial Services Ltd. price can reach defined target.

Mas Financial Services Ltd., incorporated in the year 1995, is a Mid Cap company (having a market cap of Rs 3005.87 Crore) operating in NBFC sector.

Mas Financial Services Ltd. key Products/Revenue Segments include Interest, Income From Financial Services, Fees & Commission Income and Income From Sale Of Share & Securities for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 188.68 Crore, up 4.65 % from last quarter Total Income of Rs 180.29 Crore and up 28.13 % from last year same quarter Total Income of Rs 147.26 Crore. Company reported net profit after tax of Rs 43.44 Crore in latest quarter.

Investment Rationale
The company has a healthy financial track record. The brokerage expects MFSL to grow its Asset Under management (AUM) at 23% CAGR while NII and Net profit are expected to grow at 22% and 26% CAGR respectively over FY21-24E. ROAA is estimated to improve to 3.1% in FY24E from current 2.8% in FY22P. Management has guided that NIMs could hover around 6.5-7%, however, on the conservative side it has envisaged that it could remain on lower side. As the outlook for the MFI sector improves it feels that the asset quality will start to improve. Management has guided that the focus will be on the flagship products MFI loans. They expect that the company is soon reverting back to the normal trajectory of 20%-25% that it has demonstrated for more than a decade.

Promoter/FII Holdings
Promoters held 73.64 per cent stake in the company as of 31-Mar-2022, while FIIs owned 1.53 per cent, DIIs 9.46 per cent.