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Axis Securities
MAS Financial (Buy)
Target: ₹978
CMP: ₹919.15
MAS Financials Ltd. (MAS) is a diversified financial services provider focused on low income groups and economically weaker individuals operating small businesses, as well as SMEs having limited access to formal financing channels.
Over the long-term, MAS’s AUM growth is likely to be driven by micro-enterprise and SME loans, given high level of under-penetration in both segments. MAS continues to remain cautious in its lending approach and extends credit only where it is due. With disbursements yet to reach pre-Covid levels, we believe growth is likely to pick-up from H2-FY22 .
MAS operates a unique business model under which it partners with smaller NBFCs operating in similar segments having a pan-India presence. With entire customer sourcing opex and default risk borne by these partner NBFC, the model not only provides MAS with ample growth opportunities but also enables it to keep opex, and credit risk under control.
As a prudent practice, MAS does not utilize more than 65-70 per cent of its cash credit limits, leaving ample liquidity on hand. Post stress testing the liquidity model, MAS is comfortably placed to cover opex and repay its debt obligations of about ₹500 crore over the next 1 year. Currently, the liquidity position continues to remain strong with cash and bank balance at ₹1,000 crore and sanctions of ₹1,850 crore.
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