- AUM (Assets Under Management): INR 11,006.72 crores, up 24.12% year-on-year.
- Profit After Tax (PAT): INR 72.56 crores, up 26.06% year-on-year.
- Standalone AUM: INR 10,383 crores, up 23.35% year-on-year.
- Microenterprise Loans: INR 4,523 crores, up 12.49% year-on-year.
- SME Loans: INR 3,784 crores, up 23.06% year-on-year.
- Two-Wheeler Loans: INR 669 crores, up 17.13% year-on-year.
- Commercial Vehicle Loans: INR 817 crores, up 82.28% year-on-year.
- Salaried Personal Loans (SPL): INR 590 crores, up 95% year-on-year.
- Total Income: INR 347 crores, up 23.71% year-on-year.
- Profit Before Tax (PBT): INR 94.39 crores, up 24.53% year-on-year.
- Gross Stage 3 Assets: 2.29%.
- Net Stage 3 Assets: 1.52%.
- Housing Finance AUM: INR 623 crores, up 38.44% year-on-year.
- Housing Finance Total Income: INR 18.63 crores, up 36.91% year-on-year.
- Housing Finance PBT: INR 2.80 crores, up 38.46% year-on-year.
- Housing Finance PAT: INR 2.17 crores, up 36.41% year-on-year.
- Housing Finance Gross Stage 3 Assets: 0.90%.
- Housing Finance Net Stage 3 Assets: 0.65%.
- Average Cash and Cash Equivalent: INR 800 crores (excluding QIP proceeds).
- QIP Proceeds: INR 500 crores.
- Unutilized Cash Credit Facilities: INR 600 crores.
- Sanctions on Hand: INR 2,200 crores in term loan, direct assignment, and co-lending.
- Direct Assignment and Co-lending Transactions: INR 600 crores.
- Available Cash Credit Facilities: INR 1,700 crores, with 70%-75% average utilization.
- Term Loan Raised: INR 490 crores during the quarter.
- Term Loan Sanctions on Hand: INR 725 crores.
- NCD Raised: INR 150 crores during the quarter.
- Capital Adequacy: 28.59%.
- Tier-1 Capital: 25.39%.
- Debt Equity Ratio: 3.08 times.
- Cost of Borrowing: 9.80%.
Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- MAS Financial Services Ltd (BOM:540749, Financial) reported a 25% growth in AUM and PAT on a consolidated basis, maintaining strong fundamentals in asset quality, capital adequacy, and liquidity.
- The company's housing finance segment grew by 38% year-on-year, with expectations of a 35% growth in the foreseeable future.
- MAS Financial Services Ltd successfully raised INR 500 crores through a QIP, which was subscribed multiple times, indicating strong investor confidence.
- The company aims to double its AUM every three to four years, leveraging its niche expertise and a strong team of close to 4,000 employees.
- MAS Financial Services Ltd maintains a robust capital adequacy ratio of 28.59%, with Tier-1 capital at 25.39% and a debt-equity ratio of 3.08 times.
Negative Points
- The company's growth in Q1 was slightly muted at 2.5% QoQ, attributed to seasonal factors like elections and a heatwave, which impacted collections.
- There was a marginal drop in the current portfolio by 0.6%, which the company attributes to limitations on collection efforts rather than credit quality deterioration.
- The cost of borrowing increased slightly to 9.80% from 9.65% in the previous year, although it remained stable compared to the March quarter.
- The company's direct retail distribution is expected to increase at a faster pace, which may require recalibration of DPDs within the 90 DPD bucket, potentially affecting short-term metrics.
- The company's strategy to expand in Southern states, which are more urbanized and have higher credit growth to GDP ratios, may face challenges in terms of competition and market saturation.
Q & A Highlights
Q: Can you describe the difference between the retail asset channel and direct retail distribution?
A: Direct retail distribution involves our branches and employees directly on a loan-to-loan basis, while indirect retail distribution uses NBFCs to create assets. This model has been in place for about 14-15 years.
Q: What proportion of AUM growth will come from direct distribution versus NBFCs in the next three to four years?
A: We expect direct distribution to increase at a faster pace, with around 70-75% coming from direct distribution and 25-30% from indirect distribution.
Q: Why was the AUM growth muted this quarter compared to previous quarters?
A: Q1 is typically weaker in the retail finance industry. Factors like elections and a heat wave also contributed. However, we still maintain our annual growth trajectory of 20-25%.
Q: How should we look at margins and cost of borrowings going forward, especially after the credit rating upgrade?
A: We expect some compression in borrowing costs due to the rating upgrade. We aim to maintain NIMs close to 7% and ROAs between 2.75% to 3.25%.
Q: How many of your MSME customers are Udyam registered and eligible for government benefits?
A: Practically all our MSME borrowers are Udyam registered and eligible for government benefits.
Q: There is a spike in DPD profile on a YoY basis. Is this due to elections and heat waves or credit deterioration?
A: The spike is due to limitations on collection efforts because of elections and heat waves, not credit deterioration. We expect normalization in one or two quarters.
Q: What are the future growth engines for MAS Financial, especially after capping salaried personal loans at 10%?
A: Future growth will be driven by SME, affordable housing, wheels, and MEL portfolios, with salaried personal loans capped at less than 10%.
Q: What is the overall yield on the AUM and expected cost of borrowing after the credit rating upgrade?
A: The overall yield on AUM is around 17%. We expect borrowing costs to come down by 20-25 basis points, though it may remain stable due to rising MCLR rates.
Q: What is the strategy for geographical expansion, especially in Southern states?
A: We are focusing on Tamil Nadu, Karnataka, and AP Telangana to set up our base for the next three to four years of growth.
Q: What is the general turnaround time for processing loan applications?
A: Turnaround time varies by product: one day for smaller loans like two-wheelers and PL, three to five days for SME and MEL loans, and five to seven days for housing loans.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
