Buy Mas Financial Services, target price Rs 1000: Motilal Oswal

Motilal Oswal has buy call on Mas Financial Services with a target price of Rs 1000. The current market price of Mas Financial Services Ltd. is Rs 782.

Time period given by analyst is one year when Mas Financial Services 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 4279.76 Crore) operating in NBFC sector.

Financials
For the quarter ended 30-06-2021, the company reported a Consolidated Total Income of Rs 156.52 Crore, up 6.29 % from last quarter Total Income of Rs 147.26 Crore and down -6.59 % from last year same quarter Total Income of Rs 167.56 Crore. Company reported net profit after tax of Rs 36.94 Crore in latest quarter.

Investment Rationale
Despite operating in a tough environment, with high exposure to micro loans/SME sector, MASFIN has exhibited healthy asset quality due to its unique business model and ability to leverage its relationship with partner NBFCs. Given that the external environment has still not become the most conductive and customers, especially in vulnerable MSME segments, will take time to recover from the COVID-led setbacks, asset quality and business growth will remain the key monitorables. Historically, MASFIN has managed liquidity well, with higher sell-downs. The brokerage likes MASFIN’s focus on profitability over growth. It expects loan growth to remain muted in FY22E, and then steadily recover to 11-14% over FY23-FY24E. It increases FY22E/FY23E PAT estimate by ~5%/2% to factor in lower opex and credit cost, despite modelling a decline in loan growth.

Promoter/FII Holdings
Promoters held 73.6 per cent stake in the company as of June 30, 2021, while FIIs held 1.6 per cent, DIIs 10.5 per cent and public and others 14.3 per cent.