- AUM (Assets Under Management): INR 11,600 crore on a consolidated basis, a 24.12% growth from INR 8,867 crore.
- Profit After Tax (PAT): INR 72.56 crore, a 26.06% growth from INR 57.56 crore.
- Micro-Enterprise Loans: Grew by 12.49% from INR 4,021 crore to INR 4,523 crore.
- SME Loans: Grew by 23% from INR 3,074 crore to INR 3,784 crore.
- Two-Wheeler Loans: Grew by 17.13% from INR 571 crore to INR 668 crore.
- Commercial Vehicle Loans: Grew by 82.28% from INR 448 crore to INR 817 crore.
- Salaried Personal Loans (SPL): Grew by 95% from INR 302 crore to INR 590 crore.
- Total Income: Grew by 23.71% from INR 280 crore to INR 346 crore.
- Profit Before Tax (PBT): Grew by 24.53% from INR 75.80 crore to INR 94.39 crore.
- Gross Stage 3 Assets: 2.29%, compared to 2.25% in March '24.
- Net Stage 3 Assets: 1.52%, compared to 1.51% in March '24.
- Housing Finance AUM: Grew by 38.44% from INR 450 crore to INR 623 crore.
- Housing Finance Total Income: Grew by 37% from INR 13.61 crore to INR 18.63 crore.
- Housing Finance PBT: Grew by 38.46% from INR 2 crore to INR 2.80 crore.
- Housing Finance PAT: Grew by 36.41% from INR 1.59 crore to INR 2.17 crore.
- Housing Finance Gross Stage 3 Assets: 0.90%, unchanged from March '24.
- Housing Finance Net Stage 3 Assets: 0.65%, compared to 0.66% in March '24.
- Cash and Cash Equivalents: Around INR 800 crore, excluding QIP proceeds of INR 500 crore.
- Capital Adequacy Ratio: 28.59%, with Tier 1 capital at 25.39%.
- Cost of Borrowing: 9.80%, stable compared to the previous quarter.
Release Date: April 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 consolidated AUM growth of over 25% and PAT growth of 26.06% for Q1 FY24.
- The company successfully raised INR 500 crores through a QIP, which was oversubscribed multiple times.
- The housing finance segment showed a strong CAGR of 38%, with expectations of 35% growth in the foreseeable future.
- The company maintains a strong capital adequacy ratio of 28.59% with Tier 1 capital at 25.39%.
- MAS Financial Services Ltd plans to double its AUM every three to four years, leveraging its strong fundamentals and diversified product portfolio.
Negative Points
- The company's cost of borrowing remains high at 9.80%, with limited immediate prospects for significant reduction.
- There was a slight decline in the current portfolio quality due to external factors like elections and heatwaves, affecting collection efforts.
- The growth in AUM for Q1 FY24 was relatively muted at 2.5% QoQ, compared to the usual 3.5% to 4% expected growth.
- The company's direct retail distribution is expected to increase, which may lead to higher operational costs.
- There are concerns about the impact of government measures on MSMEs potentially creating a negative credit culture.
Q & A Highlights
Q: Can you describe the difference between your retail asset channel and direct retail distribution?
A: Direct retail distribution involves our branches and employees directly handling loans, 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: Currently, 65% of our distribution is direct. We expect this to increase to 70-75% direct distribution and 25-30% indirect distribution through NBFCs.
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 heatwaves also contributed. However, we maintain our annual growth trajectory of 20-25%.
Q: How will the recent credit rating upgrade affect your cost of borrowing and margins?
A: The rating upgrade will take time to reflect in lower borrowing costs. We expect a 25-30 basis point reduction in borrowing costs over the next few quarters, which should help maintain our NIMs and ROAs.
Q: What impact do you see from the government's focus on the MSME segment?
A: Practically all our MSME borrowers are Udyam registered and will benefit from government schemes. We serve a diverse range of small businesses, and the government's focus should positively impact our portfolio.
Q: There has been a spike in DPD (Days Past Due) on a YoY basis. Is this due to credit deterioration?
A: The spike is more due to collection efforts being hampered by elections and heatwaves, not credit deterioration. We expect normalization in one or two quarters.
Q: How do you plan to sustain growth in the salaried personal loans and affordable housing segments?
A: We have internal plans to grow our AUM to INR 20,000 crores in the next three to four years, focusing on SME, affordable housing, and wheels segments, while keeping salaried personal loans below 10% of the portfolio.
Q: What is your strategy for geographical expansion, particularly in southern states?
A: We are focusing on Tamil Nadu, Karnataka, and AP/Telangana. Despite higher urbanization, there are opportunities to replace private financiers and meet new demand.
Q: What is the overall yield on your AUM, and how do you see it changing with the credit rating upgrade?
A: The overall yield on our AUM is 17%. We expect the cost of borrowing to decrease by 25-30 basis points over the next few quarters due to the credit rating upgrade.
Q: What is the pricing range for your commercial vehicle loans?
A: The pricing ranges from 16-21%, depending on the model and geography. On average, we achieve around 19-20%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
