Initiating Coverage | 11 January 2018
Sector: Financials
MAS Financial Services
AUM to
double by
FY20
Strong local area
knowledge
Robust
asset quality
Healthy
return ratios
Grassroots financier
Research Analyst: Alpesh Mehta
(Alpesh.Mehta@MotilalOswal.com); +91 22 3982 5415 |
Piran Engineer
(Piran.Engineer@MotilalOswal.com); +91 22 3980 4393
Nitin Aggarwal
(Nitin.Aggarwal@MotilalOswal.com); +91 22 3982 5540
| Shubhranshu Mishra
(Shubhranshu.Mishra@MotilalOswal.com); +91 22 3982 5558
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

MAS Financial
Contents: MAS Financial | Grassroots financier
Summary ............................................................................................................. 3
A grassroots financier ........................................................................................... 5
Run by first-generation entrepreneurs .................................................................. 6
Strong risk management driving superior asset quality ........................................ 12
35%+ PAT CAGR over the medium term .............................................................. 14
SWOT analysis .................................................................................................... 17
Bull & Bear case ................................................................................................. 18
Initiate with a Buy; target price of INR740 ........................................................... 19
Key risks............................................................................................................. 21
Appendix ........................................................................................................... 22
Financials and valuations .................................................................................... 27
11 January 2018
2

MAS Financial
Initiating Coverage | Sector: Financials
MAS Financial
BSE Sensex
34,503
S&P CNX
10,651
CMP: INR626
TP: INR740 (+18%)
Buy
Grassroots financier
An efficient player in high growth product segment
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
Avg Val, INRm
Free float (%)
MASFIN IN
55
701/564
-5/-/-
34.2
0.5
397
26.8
Financial snapshot (INRb)
Y/E MARCH
FY18E FY19E
NII
2,485 3,162
PPP
1,940 2,452
PAT
1,002 1,315
EPS (INR)
18.3 24.1
BV/Share (INR) 132.6 150.7
RoA on AUM, %
2.7
2.8
RoE (%)
19.8 17.0
Valuations
P/E (x)
34.1 26.0
P/BV (x)
4.7
4.2
FY20E
3,948
3,027
1,619
29.6
172.9
2.7
18.3
21.1
3.6
MAS Financial Services (MASFIN) is an Ahmedabad-headquartered, non-deposit-taking
NBFC incorporated in 1995 by first-generation entrepreneurs, Mr. Kamlesh Gandhi and
Mr. Mukesh Gandhi. It operates out of six states, of which Gujarat and Maharashtra
account for bulk of the AUM. A quintessential NBFC, it targets the middle and low
income customer segments. Over the past five years, MASFIN’s AUM grew at a robust
35% CAGR to reach INR37b in 1HFY18. Growth was driven by their flagship product (MEL
loans) and new product such as SME loans. MEL and SME accounts for 83%+ of the total
AUM vs 64% in FY13. The company has impeccable track record of 39% PAT CAGR over
FY12-17 with consistent ROA (on AUM) of 2%+. Given a favorable backdrop, we expect
the company to deliver 25% AUM over FY17-20, resulting in 25% EPS CAGR over the
same time period.
Present in high growth segments, with differentiated offering
MASFIN is present in high-growth segments like Micro-lending (57% of AUM),
MSME Lending (25%), Vehicle Finance (13%) and Housing Finance (5%). It has a
unique business model, with over 55% of AUM coming from on-lending to other
NBFCs and sourcing agents across focused product categories. AUM generated by
NBFCs is hypothecated to MASFIN. 35-40% of AUM is assigned to banks (for PSL).
The existing network offers immense growth opportunities and we expect the
company to focus on local area expertise rather than expanding aggressively.
MASFIN should deliver 25% AUM CAGR over FY17-20.
Shareholding pattern (%)
Sep-17
As On
Promoter
73.2
DII
13.7
FII
2.6
Others
10.5
FII Includes depository receipts
Strong risk management leading to superior asset quality
The company has consistently delivered GNPA ratio of 0.8-1.2%, despite change in
norms on NPA migration and macroeconomic factors outside management
control. Being a grassroots financier with strong local area knowledge, a unique
business model of on-lending to other financiers and hypothecation of portfolio,
and strong credit control, MASFIN maintains strong control over asset quality.
Credit cost (including standard asset provision) for the company stands at ~1% -
this is among the lowest in our NBFC coverage.
MAS Financial Services
Grassroots financier
RoA to improve; PAT CAGR of 35%+
Margin improvement, operating efficiency and controlled credit cost should drive
ROA improvement of 60bp+ and the company is expected to report 18%+ ROE on
a consistent basis. The recent capital raise would be sufficient for next three years
of growth, in our view. We believe MASFIN has all the ingredients of a good
investment: (a) a small base and presence in well-developed states for strong
growth, (b) superior asset quality, (c) relentless management focus on generating
sustainable, high return ratios, (d) healthy capitalization, and (e) consistent
dividend payout. We initiate coverage with a
Buy
rating and a target price of
INR740 (25x FY20 EPS, Implied 4.3x FY20 BV).
3
Alpesh Metha
+
91 22 3982 5415
Alpesh.Mehta@MotilalOswal.com
Please click here for Video Link
11 January 2018

MAS Financial
Exhibit 1: Dupont Analysis (on avg. AUM) : ROAs to improve 60bp+ over FY17-20 led by margin expansion
MAS Financial Services
Net Interest Income
Fee Income
Net Income
Non interest Income
Net Income
Operating Expenses
Operating Profits
Provisions/write offs
PBT
Tax
PAT
Less: Preference shares and MI
PAT for Equity shareholders
Leverage (x)*
RoE
FY13
8.03
1.53
9.57
0.29
9.86
4.31
5.55
0.96
4.59
1.48
3.11
0.56
2.55
16.65
42.48
FY14
7.16
1.17
8.33
0.13
8.46
3.33
5.12
1.16
3.96
1.32
2.64
0.30
2.34
17.08
39.91
FY15
5.88
1.15
7.04
0.08
7.11
2.55
4.57
1.10
3.47
1.17
2.29
0.24
2.05
17.69
36.32
FY16
5.65
1.05
6.71
0.04
6.75
2.49
4.25
0.98
3.27
1.13
2.14
0.17
1.97
18.74
36.92
FY17
5.71
0.91
6.61
0.03
6.65
2.23
4.42
0.90
3.52
1.22
2.30
0.16
2.14
14.22
30.47
FY18E
6.60
0.83
7.43
0.03
7.46
2.31
5.15
1.05
4.10
1.41
2.69
0.03
2.66
7.46
19.85
FY19E
6.69
0.76
7.46
0.03
7.49
2.30
5.19
0.90
4.29
1.48
2.81
0.03
2.78
6.10
16.99
FY20E
6.68
0.70
7.39
0.03
7.42
2.30
5.12
0.90
4.22
1.46
2.77
0.03
2.74
6.68
18.31
Source: MOSL, Company; *: On-book leverage for FY17 is 7.7x
Exhibit 2: Valuation comparison
AUM
(INR b)
SHTF
855
LTFH
723
BAF
721
MMFS
499
CIFC
365
SCUF
249
CAFL
230
MUTH
276
MASFIN
37
Price
1,497
182
1,781
482
1, 306
2,140
836
451
626
Market Cap AUM CAGR
(INR b)
(FY17-20E)%
339
16
331
17
1,030
35
286
17
205
18
142
16
83
25
181
10
34
25
Net NPL
RoA (%)
EPS CAGR
(FY17-20E)% (1HFY18, %) FY18E FY19E
32
2.45
2.7
3.1
35
3.31
1.7
2.2
40
0.51
3.5
3.6
51
6.50
1.8
2.1
23
2.89
3.0
3.0
27
1.83
3.3
3.6
32
1.00
1.7
1.8
19
3.99
5.5
5.0
25
0.96
2.7
2.8
RoE (%)
P/B
FY18E FY19E FY18E FY19E
15.1 17.4 2.6
2.3
15.8 19.6 3.3
2.8
20.2 20.4 6.0
5.1
10.7 12.2 3.1
2.9
19.6 19.2 3.9
3.3
14.3 15.9 2.5
2.2
13.2 15.4 2.6
2.3
23.8 19.9 2.3
2.0
19.8 17.0 4.9
4.3
P/E
FY18E FY19E
18.1 13.7
23.0 15.6
37.7 27.0
34.2 24.7
21.9 18.8
18.2 14.5
21.3 15.9
10.8 10.9
35.5 27.0
Source: Company, MOSL
11 January 2018
4

MAS Financial
A grassroots financier
Unique business model
MASFIN was incorporated in 1995 by two first-generation entrepreneurs, Mr. Kamlesh
Gandhi and Mr. Mukesh Gandhi. A quintessential NBFC, MASFIN targets the middle
and low income customer segments with products ranging from MSME loans, SME
loans, 2W loans, CV loans and home loans. Around 55% of the loan book is on-lending,
i.e. lending to other NBFCs which are in similar product segments as MASFIN.
The company registered 36% AUM CAGR over FY12-17, driven by 35% CAGR in micro-
enterprise loans as well as introduction of new products such as SME & housing
finance.
With focus on the self-employed segment, NBFC partnerships for sourcing and robust
underwriting methodology, MASFIN is poised to deliver 25% AUM CAGR over FY17-
20E. The strong growth will be driven from existing geographies (capitalizing on local
area knowledge), higher share of direct lending, and continued growth in on-lending
book and new product additions.
Over two decades of lending experience
MASFIN is an Ahmedabad-headquartered, non-deposit taking NBFC with more than
two decades of business operations in financial services spread across seven states.
The company is focused on catering to the needs of the lower and middle-income
customer segments via a suite of products including MSME/SME lending, 2W loans,
CV loans and home loans. The company has a total AUM of INR37b currently, with
over 50% of the AUM in micro-enterprise lending.
Exhibit 3: Key milestones
1995
Incorporation of Company
2006
Investment by Bellwether
Microfinance Trust
Incorporation of Rural
Housing subsidiary
2008
Investment by FMO and
ICICI Ventures
2012
Investment by DEG
2014
Sarva Capital purchases 50%
CCPS stake held by FMO for
INR413m
2015
NCDs issued by the
company listed on BSE
2016
India Ratings upgraded
company’s rating to “Ind A”,
with stable outlook
2017
AUM crossed INR30b
Source: MOSL, Company
11 January 2018
5

MAS Financial
Run by first-generation entrepreneurs
Mr. Kamlesh Gandhi – Chairman and Managing Director
Founded the company is 1995
Over 21 years of experience in the financial services sector
First-generation entrepreneur
Mr. Mukesh Gandhi - Chief Financial Officer
Co-founded the company in 1995
Designated Director (Finance) and CFO since 2015
Bachelor’s and Master’s degree in commerce from Gujarat University with over
two decades of work experience
Also, Chairman of Gujarat Finance Company Association and Director of Finance
Industry Development Council
Ms Darshana Pandya – Chief Operating Officer
Joined MASFIN in 1996 and has over two decades of work experience
Promoted to Executive Director since 2016
Bachelor’s degree in commerce from Gujarat University
AUM grew at a CAGR of
36% over FY12-17 to
INR33b
Capitalizing on local area expertise – focus on profitable growth
MASFIN operates across six states (74 NBFC branches and 55 housing finance
branches) and the NCT of Delhi, and has a presence in 3,200+ locations. Bulk of its
AUM comes from Gujarat and Maharashtra. The company focuses on judicious use
of capital and develops local area expertise before becoming aggressive in any state.
While it has a presence in Tamil Nadu, Karnataka and Rajasthan, the contribution of
these states to its overall AUM is less than 20% – MASFIN is trying to build expertise
in understanding the credit culture/customer behavior in these states. Existing
states would be the key growth driver in the ensuing years. We do not expect
MASFIN to expand aggressively in new states.
Exhibit 5: 38% PAT CAGR over FY12-17
Net Profit (INRm)
74
33.3
27.0
21.0
30
30
37
Growth (%)
Exhibit 4: 36% AUM CAGR over FY12-17
AUM (INRb)
7.1
10.5
14.6
130
225
FY13
24
365
FY15
293
FY14
473
FY16
646
FY17
FY12
FY13
FY14
FY15
FY16
FY17
FY12
Source: MOSL, Company
Source: MOSL, Company
11 January 2018
6

MAS Financial
MASFIN focuses on serving
the underserved credit
needs of mid and low
income group segments
MASFIN’s business and financing products are primarily focused on high-yielding
and low-penetration middle and low income customer segments, and include five
principal categories: (i) micro-enterprise loans, (ii) SME loans, (iii) two-wheeler
loans, (iv) commercial vehicle loans (which include new and used commercial
vehicle loans, used car loans, and tractor loans), and (v) housing loans. The share of
SME loans in overall AUM has increased from 2% in FY13 to 25% currently, whereas
the share of 2W+CV loans has declined from 32% to 13% during the same period.
This was a conscious decision by management due to adverse macroeconomic
factors.
Exhibit 6: SME portfolio gaining share (%)
3
9
24
4
10
22
2
MEL
SME
4
10
16
5
Two wheeler
4
8
11
10
CV
Housing Loans
5
5
10
16
5
4
9
23
5
9
4
25
64
62
65
66
64
60
57
FY12
FY13
FY14
FY15
FY16
FY17
1HFY18
Source: MOSL, Company
Perfect blend of sourcing
MASFIN’s AUM grew at a CAGR of 36% over FY12-17 from INR7.1b to INR33.3b. As
at September 2017, its AUM was at INR36.6b. It has over 500,000 active loan
accounts. Around 55% of AUM is sourced through on-lending to other NBFCs (100+
relationships). Further, MASFIN has 300+ sourcing agent relationships for sourcing
car and 2W loans. It also has 675+ feet-on-street sales agents, who not only help in
scouting AUM for direct lending but also for on-lending relationships.
Exhibit 7: Sourcing through various channels
What?
Number of branches
Number of sales feet on street (FOS)
Number of CV loan sourcing intermediaries
Number of 2W loan sourcing intermediaries
Number of NBFC partnerships
Underlying %age of AUM sourced by partnerships
Description
74
683
316
328
105
56%
Source: MOSL, Company
Micro-enterprise loans (MEL) – a key growth driver
90% of the active customer
base from MEL product;
Avg. ticket size of ~INR34k
MASFIN provides two categories of micro-enterprise loans: (i) loans up to INR75k,
typically to self-employed individuals engaged in trading or manufacturing business,
and (ii) loans of INR75k-300k, typically to sole proprietors and partnership firms. In
FY17, the average disbursement in its MEL segment was ~INR34k. Larger proportion
of this portfolio is sourced via on-lending book. This portfolio contributes ~90% of
the company’s active customer base.
11 January 2018
7

MAS Financial
Exhibit 8: MEL is the key product for company
AUM (INR b)
64
62
60
57
65
66
Share of AUM (%)
64
5
FY12
7
FY13
9
FY14
14
FY15
17
FY16
20
FY17
21
1HFY18
Source: MOSL, Company
SME loans – sharp increase in share of AUM
SME loans a key growth
driver; share in AUM up
from 2% in FY13 to 25% in
1HFY18
MASFIN provides loans of up to INR50m to its SME customers (primarily small and
medium-sized manufacturers, dealers and service providers). The SME loan segment
includes working capital loans (up to INR50m), loans for machinery and facilities (up
to INR20m), loans against property (up to INR20m), and loans extended to housing
finance companies. In FY17, the average disbursement in its SME loan segment was
INR5.5m. Within its SME portfolio, MASFIN also plans to finance the working capital
needs of manufacturers, distributors and dealers of agricultural inputs like seeds,
fertilizers, insecticides and pesticides, and farm accessories and equipment.
Exhibit 9: SME loans’ share in AUM rising
AUM (INR m)
Share of AUM (%)
23
16
10
2
5
25
24
FY13
75
FY14
215
FY15
429
FY16
764
FY17
905
1HFY18
Source: MOSL, Company
Share of 2W loans in total
AUM declined from 24% in
FY12 to 9% in 1HFY18
Two-wheeler (2W) loans – decline in AUM share over the years
MASFIN provides two-wheeler loans primarily to farmers, self-employed or salaried
individuals, as well as professionals. Disbursements are largely sourced at the dealer
level. In absolute terms, this portfolio has remained largely stable at INR2.2b-2.8b.
In FY17, the average ticket size in the two-wheeler loan segment was ~INR43k. This
portfolio contributes ~20% of the company’s active customer base.
11 January 2018
8

MAS Financial
Exhibit 10: Two wheeler portfolio in the narrow range of INR2-3b
24
AUM (INR b)
22
16
11
10
9
9
Share of AUM (%)
1.7
FY12
2.3
FY13
2.3
FY14
2.4
FY15
2.6
FY16
2.9
FY17
3.5
1HFY18
Source: MOSL, Company
CV loans account for 4% of
the loan book
Commercial vehicle (CV) loans – risk aversion led by macro headwinds
MASFIN provides loans up to INR0.7m for the purchase of new and used commercial
vehicles, used cars as well as tractors. In this segment, customers primarily include
traders and manufacturers (for loading vehicles), travel businesses, and small road-
transport operators. In absolute terms, this portfolio has remained largely stable at
INR1b-1.3b due to macroeconomic issues like (a) sand mining ban, (b) moderate
economic activity, (c) Scrappage policy. In FY17, the average disbursement in its CV
loan segment was INR0.15m.
Exhibit 11: CV loans’ share in AUM declining
10
9
AUM (INR b)
10
8
5
4
4
Share of AUM (%)
0.6
FY12
1.1
FY13
1.4
FY14
1.6
FY15
1.4
FY16
1.2
FY17
1.3
1HFY18
Source: MOSL, Company
MASFIN owns 60% stake in
its housing finance
subsidiary
Strong momentum in affordable housing
MASFIN provides housing loans to customers for the purchase of new and old
houses, construction of houses on owned plots, home improvement, and purchase
and construction of commercial property. Its customers in this segment typically
include salaried and self-employed individuals. It also extends loans to developers
for the construction of affordable housing projects. The loan amount ranges
between INR50k and INR5m for residential property and between INR50k and
INR10m for commercial property. The housing finance business is operated through
subsidiary, MRHMFL (MASFIN owns 60%; promoters own the balance). As of
September 2017, the company had 45 sourcing intermediaries (typically project
developers and property agents) and 68 branches. In FY17, average disbursement in
the housing loan segment was INR1.22m.
11 January 2018
9

MAS Financial
Exhibit 12: Share of Housing loans in AUM gradually increasing
HL (INR b)
4
4
Share of AUM (%)
5
5
5
4
3
0.2
FY12
0.4
FY13
0.7
FY14
0.9
FY15
1.3
FY16
1.8
FY17
1.9
1HFY18
Source: MOSL, Company
We believe MASFIN will expand its housing finance business by increasing the
geographic reach of MRHMFL’s operations. MRHMFL currently operates in semi-
urban and rural areas of Gujarat, Maharashtra, Rajasthan and Madhya Pradesh, and
is likely to establish additional branches in states that have favorable business
potential for affordable housing loans. MASFIN is equipped to understand customer
preferences by assessing income levels. It will leverage its existing operational
network and customer base to cross-sell housing loans to its existing customers.
Loan sourcing done by own
feet on street, sourcing
intermediaries and NBFC
partnerships
Leveraging sourcing channels to augment growth
MASFIN extends loans largely to self-employed individuals; its focus is more on the
rural and semi-urban geographies. It sources loans through its own sales force; it
also extends loans to MFIs, HFCs and other NBFCs operating in sectors similar to its
own, particularly in geographical areas where it has limited direct operations.
Exhibit 13: Effectively utilizing on-lending model for growth
On-Lending (% of AUM)
43.6
49.7
51.9
49.5
54.7
55.9
FY13
FY14
FY15
FY16
FY17
1HFY18
Source: MOSL, Company
More than 55% of AUM
driven by on-lending
business with an aim to
create quality assets within
targeted class
When it lends to other financial institutions, a portion of their receivables and book
debts are hypothecated to MASFIN. Additionally, these financial institutions are
required to maintain an agreed percentage of the loan amount as cash collateral or
security receipts along with promoter guarantees in certain cases. As of September
2017, MAS had 683 sales feet on street (FOS), 316 CV loan sourcing intermediaries,
328 2W loan intermediaries, and 105 NBFC partnerships. As of September 2017,
56% of underlying assets (of total AUM) were sourced through NBFC partnerships.
11 January 2018
10

MAS Financial
AUM to double by FY20
Fastest FY12-17 AUM CAGR
among peers
We expect MASFIN to report 25% AUM CAGR over FY17-20 aided by continued
growth in MEL, SME loans and housing loans. We also expect a pickup in vehicle
loans led by macroeconomic factors. MASFIN is also introducing agri loan/
equipment loan products, which could drive growth further.
Exhibit 15: FY17-20E loan book CAGR (%) – among top-3
35
26
18
11
25
25
17
16
Exhibit 14: FY12-17 loan book CAGR (%) – best among peers
36
36
MASFIN
BAF
CAFL
MMFS
SCUF
BAF
MASFIN
CAFL
MMFS
SCUF
Source: MOSL, Company
Source: MOSL, Company
11 January 2018
11

MAS Financial
Strong risk management driving superior asset quality
Among the lowest credit cost companies in our NBFC coverage universe
MASFIN has strong credit policies for loan monitoring, collection and recovery,
manifesting into low credit costs.
Its unique business model of on-lending to other financiers and in turn hypothecating
the portfolio (providing at least 100% coverage) also helps MASFIN to maintain strong
control over asset quality. It also takes promoter guarantees and certain percentage of
exposure as cash collateral.
Focus on asset quality versus growth and strong local area knowledge helps the
company to keep control over credit costs.
Superior underwriting standards
In case of on-lending, part
of default risk is borne by
sourcing partners
Customer origination is primarily through MASFIN’s sales team. The sales team
informs its target customers on MASFIN’s various product offerings. MASFIN has
entered into commercial arrangements with sourcing intermediaries, including
commission-based DSAs and various dealers/distributors, where part of the loan
default is guaranteed by such sourcing partners.
Credit policies for loans on-lending book
Financial institution must have been in existence for at least three years.
Undertake due diligence and analyze audited balance sheets for three years,
verify bank account statements for previous six months and examine credit
history.
Analyze systems, operations, credit processes and policies.
Analyze portfolio at risk and NPA details, and obtain an internal de-duplication
report.
Conduct an overdue analysis, site verification, market reference checks and
interviews.
PAR90 should be less than 5%.
MASFIN hypothecates the entire portfolio with itself. It also insists on cash
collateral (certain percentage of lending) as security deposit and promoter
guarantees (in certain cases). Margin money and other charges are collected
prior to disbursements.
If the underlying portfolio turns sub-standard, the company has an arrangement
with intermediaries that it will be replaced with standard portfolio.
MASFIN also takes demand promissory notes, letters of continuity, and other
general undertakings as collateral security.
In certain circumstances, the company has the right to convert outstanding loan
amounts into fully paid-up shares in such institutional borrowers.
Loan monitoring, collection and recovery for sourcing intermediaries
Complete set of documents are stored at central office.
Borrowers with larger exposure are specifically reviewed every quarter by risk
management committee.
Delinquent borrowers are under constant scrutiny and follow-up by collection
team.
100% collection is non-cash – either post-dated cheques or NACH mandates.
12
11 January 2018

MAS Financial
In certain cases, defaults are managed through financial counseling.
For any further delinquencies, the legal team initiates legal action for seizure of
collateral for recovery of dues.
Exhibit 17: GNPA remains in the range of 1-1.2%
GNPA (%)
0.90
0.90
1.00
0.89
0.85
0.84
0.89
0.92
0.92
0.94
0.96
1.04
0.99
1.03
NNPA (%)
1.06
1.08
1.10
1.12
Exhibit 16: We bake in stable credit costs through FY18-20
1.16
0.96
1.10
0.98
1.05
0.90
0.77
0.82
Source: MOSL, Company
Source: MOSL, Company
Exhibit 18: AUM – dpd profile
1-30dpd
2.25
1.26
2.16
4.58
FY13
1.85
0.70
2.00
3.08
FY14
1.44
0.91
1.11
2.79
FY16
1.17
1.14
1.23
2.86
FY17
0.87
1.22
1.52
2.97
1HFY18
31-60dpd
61-90dpd
>90dpd
1.52
0.65
0.98
2.41
FY15
Source: MOSL, Company
11 January 2018
13

MAS Financial
35%+ PAT CAGR over the medium term
Sustainable RoE to be healthy at 19%+
We model AUM CAGR of 25% and PAT CAGR of 36% over FY17-20E. RoA (on AUM)
expansion would be largely led by higher margins, as equity contribution in overall
funding has increased sharply (7% of funds to 13% of funds) and portfolio
diversification towards higher yielding assets to take place. We also expect operating
efficiency to play out with higher growth from existing branch network.
Higher share of direct lending coupled with stable asset quality would support RoA.
We bake in RoA (on AUM) improvement of 60bp+ to 2.7% over FY17-20; however,
reduction in equity leverage would reduce RoE from 30%+ in FY17 to ~19% in FY20E.
Expect sharp RoA improvement; reduction in leverage to lower RoE
Improvement in spreads and operating leverage would improve PPoP to average
AUM by ~60bp over the next three years and RoA by 60bp to 2.7% by FY20. On the
back of large capital issuance, leverage (on AUM/loans) is expected to decline from
~17x /11xto ~7x/5x over the next three years. Overall, we expect the company to
report healthy RoE of 18-20% over the next three years.
Exhibit 19: Superior return ratios through FY17-20E, as operating leverage plays out
RoE
42.5
2.6
39.9
2.3
36.3
2.1
36.9
2.0
RoA (on AUM)
2.7
2.1
30.5
19.8
17.0
FY19E
18.3
2.8
2.7
FY13
FY14
FY15
FY16
FY17
FY18E
FY20E
Source: MOSL, Company
NIM to improve, helped by asset and liability diversification; Capital raise to
benefit
Expect 32% CAGR in NII
over FY17-20, helped by
AUM CAGR of 25% and NIM
expansion of 100bp
We bake in 100bp NIM (on AUM) expansion to 6.7%, helped by capital infusion of
INR4.4b (INR1.35b pre-IPO + INR2.3b of IPO + INR0.9b hybrid conversion) in 1HFY18,
rising share of direct lending, and diversification of asset and liability profile. Backed
by 25% AUM growth and margin expansion, we expect NII CAGR of 32% over FY17-
20E.
11 January 2018
14

MAS Financial
Exhibit 20: AUM to grow at 25% CAGR over FY17-20
AUM (in INRb)
48
38
44
29
23
26
25
25
26
27
16
30
27
YoY Growth (%)
Exhibit 21: Expect NII CAGR of 33% over FY17-20
NII (INR b)
YoY Growth (%)
44
27
25
7.1
FY12
10.5
FY13
14.6
FY14
21.0
FY15
27.0
FY16
33.3
42.0
52.5
65.6
0.6
FY12
0.7
FY13
0.9
FY14
1.0
FY15
1.4
FY16
1.7
2.5
3.2
3.9
FY17 FY18E FY19E FY20E
Source: MOSL, Company
FY17 FY18E FY19E FY20E
Source: MOSL, Company
37% of AUM is off-balance
sheet
Historically, the company has effectively utilized the securitization and assignment
route to lower cost of funds. Since a large part of the portfolio qualifies for PSL and
performance of the portfolio is superior, the share of off-balance sheet assets has
remained 35%+ of the overall portfolio.
Exhibit 22: Share of on-book and off-book AUM
On Book (%)
38
37
Off Book (%)
38
37
62
63
62
63
FY15
FY16
FY17
1HFY18
Source: MOSL, Company
Exhibit 23: Reduction in spreads led by higher share of on-lending portfolio
Yield on avg AUM (%)
22.0
19.1
18.1
17.4
Cost of funds (%)
17.4
17.0
17.0
10.1
FY14
9.9
FY15
9.5
FY16
9.6
FY17
9.0
FY18E
8.8
FY19E
8.5
FY20E
Source: MOSL, Company
Operating efficiencies to play out
MASFIN had an opex CAGR of 15% over FY12-17 versus AUM CAGR of 36%. Sourcing
arrangements for loans coupled with higher share of on-lending portfolio helps in
keeping employee count and admin costs in check. We bake in opex CAGR of 26%
versus AUM CAGR of 25% over FY17-20. Opex to AUM is expected to remain stable
at 2.30% while C/I ratio is expected to decline 250bp to 31% over FY17-20.
11 January 2018
15

MAS Financial
Exhibit 24: C/I ratio to decline 250bp
Cost to Income (%)
3.3
2.5
2.5
2.2
Cost to avg AUM (%)
2.3
2.3
2.3
Exhibit 25: Cost-to-Income ratio v/s peers in FY17
51
40
34
41
43
39
FY14
36
FY15
37
FY16
34
FY17
31
FY18E
31
FY19E
31
FY20E
MASFIN
SCUF
BAF
MMFS
CAFL
Source: MOSL, Company
Source: MOSL, Company
Sufficiently capitalized for at least three years of growth
MASFIN has effectively used various measures (assignment/securitization, hybrid
instruments, and focused profitable growth) for capital conservation and deliver
higher value to shareholders. In 1HFY18, it raised INR4.4b and net worth has
increased to INR6.5b (from INR1.8b). Post the capital raising, leverage (on balance
sheet) reduced to ~4x and tier-I ratio improved to 32%+. Based on expected internal
accruals, focus on 25-30% growth, and strong capitalization, we believe MASFIN is
adequately capitalized for at least three years of growth.
Exhibit 26: Capital consumption v/s loan growth
Capital consumption (in bp)
47.6
44.2
38.3
Loan growth (%)
28.6
23.4
469
16.47
14.76
13.24
16.90
11.49
FY15
11.10
FY16
FY17
24.53
Exhibit 27: MASFIN remains well capitalized
CRAR (%)
22.45
Tier 1 ratio
22.96
18.95
18.14
18.27
13
-208
-350
-81
FY13
FY14
FY15
FY16
FY17
FY12
FY13
FY14
Source: MOSL, Company
Source: MOSL, Company
11 January 2018
16

MAS Financial
SWOT analysis
Presence in high-growth business segments, with
lower asset quality risk.
Highly scalable loan sourcing business model.
Strong technology platform.
Best-in-class liability franchise, with declining
dependence on bank borrowings.
Strength
Dependence on loan sourcing intermediaries.
Geographic concentration in six states.
Weaknesses
Operates in underpenetrated business segments
with huge growth potential.
With implementation of GST and RERA, there could
be a shift to more formal sources of financing.
Opportunities
High share of informal sector exposure.
Intense competition in new markets like the NCR,
Karnataka and Tamil Nadu may impact yields.
Threats
11 January 2018
17

MAS Financial
Bull & Bear case
Bull Case
In our bull case, we assume strong AUM CAGR of 30% (v/s 25% in base case).
We believe scale up of housing finance business and growth in MEL business
could surprise on the upside.
We expect margins to increase slightly to 6.8% by FY20E (v/s 6.7% in the base
case) as the company is able to hold on to yields despite a competitive scenario.
We expect significant cost control, with cost-to-income ratio declining to 27% by
FY20E compared to 31% in our base case.
This results in PAT CAGR of 44% (v/s 36% in our base case) over FY17-20e, with
RoA/RoE of 4.4%/21% in FY20E (4.0%/18% in base case).
Based on the above assumptions, we value the company at INR907 (25x FY20E
EPS) – an upside of 47%.
Bear Case
In our bear case, we assume AUM CAGR of 15% (v/s 25% in our base case).
Delay in scaling up the newly-launched lending products and modest trend in
the MEL segment may result in such a scenario.
We expect margins to decline to 6.2% by FY20E v/s 6.7% in the base case driven
by continued yield pressure
We expect cost ratios to increase, resulting in C/I ratio increasing to 38% by
FY20E (v/s 31% in our base case).
This results in PAT CAGR of 21% (v/s 36% in our base case) over FY17-20E, with
RoA/RoE at 3.3%/13.4% in FY20E.
Based on the above assumptions, we value the stock at INR480 (23x FY20E EPS)
– a downside of 22%.
Exhibit 28: Scenario Analysis – Bull Case
Bull Case
Total Income
Opex
Provisions
PBT
PAT
NIM (%)
RoA (%)
RoE (%)
EPS
BV
Target earnings multiple
Target price (INR)
Upside (%)
FY18E
2,892
871
412
1,609
1,044
6.5
4.0
20.6
19.1
133.2
25
907
47%
FY19E
3,919
1,087
467
2,365
1,537
6.8
4.4
19.6
28.1
154.3
FY20E
4,943
1,357
594
2,993
1,945
6.8
4.4
21.2
35.6
181.0
Exhibit 29: Scenario Analysis – Bear Case
Bear Case
Total Income
Opex
Provisions
PBT
PAT
NIM (%)
RoA (%)
RoE (%)
EPS
BV
Target earnings multiple
Target price (INR)
Upside (%)
FY18E
2,785
871
395
1,519
985
6.5
3.9
19.5
18.0
132.4
23
480
-22%
FY19E
3,119
1,111
397
1,611
1,043
6.2
3.4
13.7
19.1
146.7
FY20E
3,448
1,386
436
1,626
1,050
6.2
3.0
12.5
19.2
161.1
Source: Company, MOSL
Source: Company, MOSL
11 January 2018
18

MAS Financial
Initiate with a Buy; target price of INR740
Consistent performance warrants premium valuations
Strong growth, best-in-class
asset quality and efficient
use of capital are some of
the key strengths of the
company
Margin improvement, operating leverage and controlled credit cost should drive
RoA improvement of 60bp+ and we expect the company to consistently report 18%+
RoE. The recent capital raising would be sufficient for the next three years of
growth, in our view. We believe MASFIN has all the ingredients of a good
investment: (a) a small base and presence in well-developed states for strong
growth, (b) superior asset quality, (c) relentless management focus on generating
sustainable, high return ratios, (d) healthy capitalization, and (e) consistent dividend
payout. We initiate coverage with a
Buy
rating and a target price of INR740 (25x
FY20E EPS, implied 4.3x FY20E BV).
Exhibit 30: DuPont analysis (on avg. AUM)
%
Net Interest Income
Fee Income
Net Income
Non interest Income
Net Income
Operating Expenses
Operating Profits
Provisions/write offs
PBT
Tax
PAT
Less: Preference shares and MI
PAT for Equity shareholders
Leverage (x)
RoE
FY13
8.03
1.53
9.57
0.29
9.86
4.31
5.55
0.96
4.59
1.48
3.11
0.56
2.55
16.65
42.48
FY14
7.16
1.17
8.33
0.13
8.46
3.33
5.12
1.16
3.96
1.32
2.64
0.30
2.34
17.08
39.91
FY15
5.88
1.15
7.04
0.08
7.11
2.55
4.57
1.10
3.47
1.17
2.29
0.24
2.05
17.69
36.32
FY16
5.65
1.05
6.71
0.04
6.75
2.49
4.25
0.98
3.27
1.13
2.14
0.17
1.97
18.74
36.92
FY17
5.71
0.91
6.61
0.03
6.65
2.23
4.42
0.90
3.52
1.22
2.30
0.16
2.14
14.22
30.47
FY18E
6.60
0.83
7.43
0.03
7.46
2.31
5.15
1.05
4.10
1.41
2.69
0.03
2.66
7.46
19.85
FY19E
6.69
0.76
7.46
0.03
7.49
2.30
5.19
0.90
4.29
1.48
2.81
0.03
2.78
6.10
16.99
FY20E
6.68
0.70
7.39
0.03
7.42
2.30
5.12
0.90
4.22
1.46
2.77
0.03
2.74
6.68
18.31
Source: MOSL, Company
Exhibit 31: DuPont analysis (average FY18-20E) – vs. competition
Net Interest Income
Fee Income
Net Income
Other Income
Total Income
Operating Expenses
Operating Profits
Provisions/write offs
PBT
Tax
PAT
Less: Preference shares and MI
PAT for Equity shareholders
Leverage (x)
RoE
SCUF
13.41
0.16
13.57
0.03
13.60
5.33
8.27
3.20
5.07
1.77
3.30
0.00
3.30
4.71
15.57
MMFS
8.25
0.23
8.48
0.20
8.68
3.48
5.19
2.28
2.91
0.99
1.92
0.00
1.92
7.57
14.59
BAF
10.61
1.49
12.10
0.09
12.19
4.82
7.36
1.66
5.70
1.99
3.71
0.00
3.71
5.71
21.25
CAFL
MASFIN
8.16
6.66
2.17
0.77
10.33
7.42
0.28
0.03
10.61
7.46
5.30
2.30
5.31
5.15
3.09
0.95
2.21
4.20
0.73
1.45
1.49
2.75
0.00
0.03
1.49
2.73
10.23
6.75
15.26
18.38
Source: MOSL, Company
11 January 2018
19

MAS Financial
Exhibit 32: MASFIN price chart (INR)
680
650
620
590
560
Share price
9.0
6.0
3.8
3.0
0.2
0.0
0.8
2.3
5.9
5.5
Exhibit 33: BAF P/B chart
P/B (x)
Min (x)
Avg (x)
+1SD
Max (x)
-1SD
Source: MOSL, Company
Source: MOSL, Company
Exhibit 34: CAFL P/B chart
P/B (x)
Min (x)
3.5
2.5
1.5
0.5
1.7
1.1
0.8
2.3
Avg (x)
+1SD
Max (x)
-1SD
3.0
Exhibit 35: MMFS P/B chart
P/B (x)
Min (x)
3.8
2.4
2.8
1.8
0.8
2.7
2.1
1.0
1.6
Avg (x)
+1SD
Max (x)
-1SD
3.3
3.1
Source: MOSL, Company
Source: MOSL, Company
Exhibit 36: SCUF P/B chart
3.4
2.6
1.8
1.0
P/B (x)
Min (x)
Avg (x)
+1SD
Max (x)
-1SD
3.2
2.2
1.6
1.2
Exhibit 37: Muthoot Finance P/B chart
2.8
2.0
1.2
0.4
P/B (x)
Min (x)
Avg (x)
+1SD
2.3
2.0
1.1
1.5
0.6
Max (x)
-1SD
2.1
2.5
2.0
Source: MOSL, Company
Source: MOSL, Company
11 January 2018
20

MAS Financial
Key risks
Geographic concentration
The company has significant concentration in Gujarat (36 branches) and
Maharashtra (20); these two states account for ~90% of its branches. Though the
management has chalked out plans to diversify into new geographies, the high
geographic concentration is likely to remain in the medium term.
Dependence on sourcing partners
As of September 2017, 56% of MASFIN’s outstanding AUM was sourced by NBFC,
MFI and HFC partnerships. We reckon that these sourcing channels may not yield
the growth desired by MASFIN. Also, such partnerships increase the counterparty
risk, though MASFIN has portfolio hypothecated as additional collateral apart from
promoter guarantees.
Exposure to informal sector
MASFIN largely caters to self-employed/salaried individuals and farmers in semi-
urban and rural areas. Given that most of these people have uneven cash flows as
income, any adverse event could trigger large scale migration to hard-bucket NPAs,
and eventually to loss assets and write-offs.
Significant dependence on bank borrowings
Funding requirement has historically been met through term loans from financial
institutions (primarily banks). While the company is planning to diversify its liability
mix, near-term concentration on one source of borrowings will remain a key risk.
11 January 2018
21

MAS Financial
APPENDIX - 1
PRODUCT AND CLIENT-WISE CREDIT ASSESSMENT CRITERIA
*TYPES OF LOAN
MEL
Loan size
Up to INR 75k
Client type
Self-Employed Non-
Professionals (SENP)
involved in
manufacturing and
trading
Credit assessment and approval criteria
Age between 21 and 65 years
Applicant below 25 years need a family member as co-applicant
Credit Bureau and internal database check on applicant, co-applicant
and guarantor
Site visits and interviews with applicant
Collect bank statements for previous six months for all accounts, where
applicable
Loans upto INR50k approved by credit officer, INR50-60k Senior Credit
officer and >INR60k by credit – in – Charge
Minimum age of 22 years (family owned business) and 25 years (first
generation business); Maximum age 65 years
Applicant's spouse as a co-applicant in all cases
Residence/business premises should be owned either by
applicant/parent/spouse/child
Credit Bureau and internal database check on applicant, co-applicant
and guarantor
Site visits and interviews with applicant; Upto INR0.1m interviews done
by local site officer and loans >INR0.1m by branch manager or branch
credit officer
Loans upto INR0.1m approved by senior credit officer, INR100-150k by
credit - in - Charge and >INR150k by director or COO
Collect bank statements for last 6 months for all applicable accounts
Verify IT returns along with financial statements to ensure for cash
profit in previous 3 years
INR75k to INR
300k
Sole proprietors and
partnerships
SME
Key underwriting standards applied across categories in SME
Cash collateral
One woman borrower as co-applicant and a third party guarantee
Credit bureau, internal de-duplication and market reference checks, as applicable, along with site visits and interviews
Personal Guarantees along with post-dated checks mandatory
Cash Collateral as an additional security, if required
Financial statements of past three years
11 January 2018
22

MAS Financial
SME
Loan size
Up to INR5m
Client type
Small and medium size
manufacturers,
distributors, dealers
and service providers
Credit assessment and approval criteria
Business is required to have an operating history of at least one year or
more; Machinery loans operating history of >5years
Ownership of at least one property.
50% of turnover (70% for machinery loans), as assessed by our credit
team, present in current account.
Guarantor is required for machinery loans
Up to INR10m
Small and medium size
manufacturers,
distributors, dealers
and service providers
Business is required to have an operating history of at least two years
or more; Machinery loans operating history of >5years
Ownership of at least one property.
55% of turnover (70% for machinery loans), as assessed by our credit
team, present in current account.
Guarantor is required for machinery loans
Up to INR20m
Small and medium size
manufacturers,
distributors, dealers
and service providers
Business is required to have an operating history of at least three years
or more ; Machinery loans operating history of >5years upto INR1.5m
and >7years for upto INR2m
Ownership of residential and business property.
60% of turnover (70% upto INR1.5m and 75% upto INR2m for
machinery loans) as assessed by our credit team, present in current
account.
Audited financial statements required for machinery loans
Up to INR30m
Small and medium size
manufacturers,
distributors, dealers
and service providers
Business is required to have an operating history of at least four years
or more.
Ownership of residential and business property.
65% of turnover, as assessed by our credit team, present in current
account.
Up to INR50m
Small and medium size
manufacturers,
distributors, dealers
and service providers
Business is required to have an operating history of at least five years
or more.
Ownership of residential and business property.
70% of turnover, as assessed by our credit team, present in current
account.
11 January 2018
23

MAS Financial
LAP
Loan size
Up to INR7.5m in
metro cities,
INR5m in urban
areas, INR4m in
semi-urban
areas
Client type
Small and medium size
manufacturers,
distributors, dealers
and service providers
Credit assessment and approval criteria
Business is required to have an operating history of one year or more.
Ownership of at least one property.
50% - 60% turnover, as assessed by our credit team, present in current
account.
Up to INR15m in
metro cities,
INR12.5m in
urban areas,
INR10m in semi-
urban areas
Up to INR20m in
metro cities,
INR15m in urban
areas, INR10m in
semi-urban
areas
Small and medium size
manufacturers,
distributors, dealers
and service providers
Business is required to have an operating history of two years or more.
Ownership of residence and business property.
60% - 75% turnover, as assessed by our credit team, present in current
account.
Business is required to have an operating history of three years or
more.
Ownership of residence and business property.
At least 75% turnover, as assessed by our credit team, present in
current account.
Two-
Wheelers
Loan size
INR 15k to
INR200k
Client type
SENP, Farmers and
Salaried
Credit assessment and approval criteria
Age between 18 to 60
At least one property (residential or business) should be owned by the
applicant or jointly residing family members.
A family member as a co-applicant is compulsory if the applicant is self-
employed
Conduct credit bureau and other database checks on the applicant, co-
applicant and guarantor.
Site visit
11 January 2018
24

MAS Financial
0
Loan size
Commercial
Vehicles
Client type
Traders,
Manufacturers and
Road transporters
Credit assessment and approval criteria
Age between 18 to 65
A family member as a co-applicant is compulsory if the applicant is self-
employed
At least one property (residential or business) should be owned by the
applicant or jointly residing family members.
The vehicle is hypothecated to MASFIN and the insurance policy is
required to be executed in its favor.
Conduct credit bureau and other database checks on the applicant, co-
applicant and guarantor.
Collect bank statements for previous six months for all accounts, where
applicable
Site visit
Up to INR700k
Home
Loans
Loan size
INR50k to
INR5m for
residential
properties
INR50k to
INR10m for
commercial
properties
Client type
SENP and Salaried
Credit assessment and approval criteria
Age between 18 to 65
Conduct credit bureau and other database checks on the applicant, co-
applicant and guarantor.
For loans extended to developers for affordable housing projects, the
applicant is required to have at least three years'
Operating experience with ownership of residential or office property.
Site visit
11 January 2018
25

MAS Financial
Appendix -2 History of capital raise
Exhibit 38: Equity Share Capital Raise
Date
Investor
Issuance
Issued
24,70,175
Equity Shares
Issued
17,39,865
Equity Shares
Issued
12,80,723
Equity Shares
Issued 87,716
Equity Shares
Issued
10,34,553
Equity Shares
Issued
29,55,819
Equity Shares
Issued 125
shares
Price
263.03
124.93
322.71
456
Terms
Conversion of 4998 CCD
Others
All offered for sale in IPO
21-Sep-17 DEG
12-Sep-17 FMO
12-Sep-17 Sarva Capital
Nine Individual
Shareholders
Motilal Oswal
Securities and Motilal
19-Apr-17
Oswal Financial
Services
Motilal Oswal
Securities and Motilal
30-Mar-17
Oswal Financial
Services
12-Sep-17
13-Jun-12 DEG
Conversion of 2,17,35,545 Series A
All offered for sale in IPO
CCCPS
Conversion of 2,17,35,545 Series B
CCCPS
Conversion of 400 Series C CCCPS
60% offered for sale in IPO
338.31 (INR350m)
Preferential Allotment
338.31
(INR1,000m)
Preferential Allotment
1200 (Including
premium of
Along with CCDs
INR1190)
Exhibit 39: Preference Equity Share Capital Raise
Date
13-May-16
Investor
Nine Shareholders
(Individual)
Issuance
Issued 400
CCPS
Issued
2,17,35,545
CCPS
Issued
2,17,35,545
CCPS
Issued 4998
CCDs
Terms
Others
9.75% CCCPS; To be converted into
Conversion price near to
FV of INR0.1m
Equity Shares at INR1685 (pre
IPO price
bonus, split etc)
13.31% (from 17-02-2014) Series B
Acquired from FMO for
CCCPS
INR413.3m
FV of INR10
To be converted into ES by
(at PAR)
(Conversion from FMO holding of
17-02-2021 or at IPO
30-06-2008)
whichever is earlier
0.01% (from 17-02-2014) CCCPS
To be converted into ES by
Series A
FV of INR10 (at
13-10-2021 or at IPO
PAR)
(Conversion from FMO holding of
whichever is earlier
30-06-2008)
At a premium
INR30,000 per CCD;
To be converted into
FV of INR1,00,000
Equity shares
per CCD
Half of these sold to Sarva
on 29-01-2014 at
FV of INR10
INR413.3m after breaking
7% CCCPS
(at PAR)
the holding in Series A CCPS
(FMO holds it) and Series B
CCPS (Sarva holds it)
Source: MOSL, Company
Price
29-Jan-14
Sarva Capital
29-Jan-14
FMO
28-Jul-12
DEG
23-Jul-08
FMO
Issued
4,34,71,090
11 January 2018
26

MAS Financial
Financials and valuations
INCOME STATEMENT
Y/E MARCH
Interest Income
Interest Expense
Net Financing income
Change (%)
Other operating income
Other Income
Net Income
Change (%)
Operating Expenses
Change (%)
Operating Profits
Change (%)
Total Provisions
% to operating income
PBT
Tax
Tax Rate (%)
PAT
Change (%)
Preference Dividend
Minority Interest
PAT for Equity Shareholders
Change (%)
Proposed Dividend
BALANCE SHEET
Y/E MARCH
Equity Share Capital
Reserves & Surplus
Networth
Minority Interest
Other Capital Instruments
Borrowings
Change (%)
Other liabilities
Change (%)
Total Liabilities
Loans
Change (%)
Investments
Net Fixed Assets
Other assets
Total Assets
Assumptions
AUM (INR M)
Change (%)
On Balance Sheet
Off Balance Sheet
E: MOSL Estimates
2012
1,002
438
564
127
29
719
342
377
91
24.0
287
85
29.7
202
73
0
130
0
2013
1,270
560
710
26.0
135
26
871
21.2
381
11.4
491
30.0
85
17.3
406
131
32.3
275
36.2
48
2
225
74.0
23
2014
1,687
788
898
26.5
147
16
1,061
21.8
418
9.8
643
31.0
146
22.7
497
166
33.4
331
20.5
33
5
293
30.1
35
2015
2,164
1,117
1,046
16.5
205
13
1,265
19.2
453
8.3
812
26.3
195
24.0
617
209
33.8
408
23.3
35
8
365
24.5
56
2016
2,779
1,423
1,356
29.6
253
10
1,619
28.0
598
32.0
1,021
25.8
236
23.1
785
271
34.5
515
26.1
35
6
473
29.5
176
2017
3,364
1,642
1,721
26.9
273
10
2,005
23.8
672
12.4
1,333
30.5
272
20.4
1,060
367
34.6
693
34.8
40
8
646
36.7
132
2018E
4,199
1,714
2,485
44.3
314
12
2,811
40.2
871
29.7
1,940
45.6
396
20.4
1,544
533
34.5
1,012
45.9
0
10
1,002
55.1
250
(INR Million)
2019E
2020E
5,223
6,528
2,060
2,579
3,162
3,948
27.3
24.9
362
416
15
19
3,539
4,383
25.9
23.8
1,087
1,357
24.8
24.8
2,452
3,027
26.4
23.4
425
532
17.3
17.6
2,026
2,495
699
861
34.5
34.5
1,327
1,634
31.2
23.1
0
0
12
15
1,315
1,619
31.3
23.1
329
405
(INR Million)
2019E
2020E
547
547
7,690
8,904
8,236
9,451
127
142
0
0
26,561
34,131
29.3
28.5
882
1,147
30.0
30.0
35,806
44,870
34,131
42,664
25.0
25.0
0
0
116
133
1,559
2,073
35,806
44,870
2019E
52,509
25.0
65.0
35.0
2020E
65,637
25.0
65.0
35.0
2012
100
336
436
24
835
4,563
183
6,040
4,430
1
62
1,548
6,040
2012
7,137
2013
100
525
625
40
935
6,278
37.6
140
-23.5
8,018
6,011
35.7
1
61
1,945
8,018
2013
10,532
47.6
62.0
38.0
2014
160
684
844
66
935
9,292
48.0
195
38.7
11,331
9,226
53.5
1
58
2,046
11,331
2014
14,563
38.3
57.4
42.6
2015
160
1,006
1,166
92
935
13,270
42.8
257
32.3
15,720
13,220
43.3
3
46
2,450
15,720
2015
20,996
44.2
63.8
36.2
2016
160
1,235
1,395
98
955
16,665
25.6
345
34.0
19,458
17,249
30.5
3
82
2,124
19,458
2016
26,999
28.6
63.4
36.6
2017
430
2,416
2,846
105
975
17,564
5.4
522
51.3
22,011
21,093
22.3
0
87
831
22,011
2017
33,326
23.4
64.4
35.6
2018E
547
6,703
7,250
115
0
20,536
16.9
678
30.0
28,579
27,312
29.5
0
101
1,166
28,579
2018E
42,019
26.1
63.6
36.4
11 January 2018
27

MAS Financial
Financials and valuations
RATIOS
Y/E MARCH
Spreads Analysis (%)
Yield on loans
Cost of Funds
Spreads (On books)
NIMs (On AUM)
Profitability Ratios (%)
RoE
RoA
RoA (on AUM)
Op. Exps./Net Income
Empl. Cost/Op. Exps.
Asset-Liability Profile (%)
Net NPAs to Adv.
Debt/Equity (x) - On BS
Average leverage
CAR
Valuations
Book Value (INR)
Price-BV (x)
Adjusted BV (INR)
Price-ABV (x)
EPS (INR)
EPS Growth (%)
Price-Earnings (x)
E: MOSL Estimates
2012
22.6
9.6
13.0
2013
24.2
10.3
13.9
8.0
2014
22.0
10.1
11.9
7.2
2015
19.1
9.9
9.2
5.9
2016
18.1
9.5
8.6
5.7
2017
17.4
9.6
7.8
5.7
2018E
17.4
9.0
8.4
6.6
2019E
17.0
8.8
8.3
6.7
2020E
17.0
8.5
8.5
6.7
47.5
29.7
42.5
3.21
2.55
43.7
34.8
39.9
3.03
2.34
39.4
35.0
36.3
2.70
2.05
35.8
37.8
36.9
2.69
1.97
36.9
40.8
30.5
3.12
2.14
33.5
43.7
19.8
3.96
2.66
31.0
43.8
17.0
4.09
2.78
30.7
43.9
18.3
4.01
2.74
31.0
44.0
0.8
12.4
12.4
24.5
2012
43.6
39.8
13.0
0.8
11.5
11.9
22.5
2013
62.5
56.3
22.5
74.0
0.8
12.1
11.9
19.0
2014
52.8
47.4
18.3
-18.7
0.8
12.2
12.2
18.1
2015
72.9
65.4
22.8
24.5
0.9
12.6
12.4
18.3
2016
87.2
76.7
29.5
29.5
0.9
6.5
8.5
23.0
2017
66.2
9.4
63.8
9.8
15.0
-49.1
41.6
0.9
2.8
3.9
28.8
2018E
132.6
4.7
130.2
4.8
18.3
21.9
34.1
0.9
3.2
3.0
26.1
2019E
150.7
4.2
147.5
4.2
24.1
31.3
26.0
1.0
3.6
3.4
24.0
2020E
172.9
3.6
168.9
3.7
29.6
23.1
21.1
11 January 2018
28

REPORT GALLERY
RECENT INITIATING COVERAGE REPORTS
Rs

Disclosures:
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Securities Ltd. (MOSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOSL, the Research Entity (RE) as defined in the Regulations, is engaged in the business of providing Stock
broking services, Investment Advisory Services, Depository participant services & distribution of various financial products. MOSL is a subsidiary company of Motilal Oswal Financial Service Ltd. (MOFSL). MOFSL is a listed
public company, the details in respect of which are available on
www.motilaloswal.com.
MOSL is registered with the Securities & Exchange Board of India (SEBI) and is a registered Trading Member with National Stock
Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Metropolitan Stock Exchange Of India Ltd. (MSE) for its stock broking activities & is Depository participant with Central Depository Services Limited
(CDSL) & National Securities Depository Limited (NSDL) and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products. Details of associate entities of Motilal Oswal Securities Limited are
available on the website at
http://onlinereports.motilaloswal.com/Dormant/documents/Associate%20Details.pdf
MAS Financial
NOTES
Pending Regulatory Enquiries against Motilal Oswal Securities Limited by SEBI:
SEBI pursuant to a complaint from client Shri C.R. Mohanraj alleging unauthorized trading, issued a letter dated 29th April 2014 to MOSL notifying appointment of an Adjudicating Officer as per SEBI regulations to hold
inquiry and adjudge violation of SEBI Regulations; MOSL requested SEBI to provide all documents, records, investigation report relied upon by SEBI which were referred in Show Cause Notice. The matter is currently
pending.
MOSL, it’s associates, Research Analyst or their relative may have any financial interest in the subject company. MOSL and/or its associates and/or Research Analyst may have beneficial ownership of 1% or more securities in
the subject company at the end of the month immediately preceding the date of publication of the Research Report.
MOSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a)
from time to time, have a long or short position in, act as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and
earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other
potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the specific recommendations made by the analyst(s),
as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOSL even though there might exist an inherent conflict of interest in some of the stocks mentioned in the
research report.
Research Analyst may have served as director/officer, etc. in the subject company in the last 12 month period. MOSL and/or its associates may have received any compensation from the subject company in
the past 12 months.
In the last 12 months period ending on the last day of the month immediately preceding the date of publication of this research report, MOSL or any of its associates may have:
a)
managed or co-managed public offering of securities from subject company of this research report,
b)
received compensation for investment banking or merchant banking or brokerage services from subject company of this research report,
c)
received compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company of this research report.
d)
Subject Company may have been a client of MOSL or its associates during twelve months preceding the date of distribution of the research report.
MOSL and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report. To enhance transparency, MOSL has incorporated a Disclosure
of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report. MOSL and / or its affiliates do and seek to do business including investment banking with
companies covered in its research reports. As a result, the recipients of this report should be aware that MOSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research
Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.
Terms & Conditions:
This report has been prepared by MOSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and may not be altered in any way, transmitted to,
copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of MOSL. The report is based on the facts, figures and information that are considered
true, correct, reliable and accurate. The intent of this report is not recommendatory in nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not
been independently verified and no guaranty, representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice.
The report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments for the clients. Though
disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOSL will not treat recipients as customers by virtue of their receiving this report.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or
indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Disclosure of Interest Statement
Analyst ownership of the stock
MAS Financial
No
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental research and Technical Research. Proprietary
trading desk of MOSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated from MOSL research activity and therefore it can have an independent view with regards to
subject company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to law,
regulation or which would subject MOSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities and Futures Commission (SFC)
pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with
Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any
investment or investment activity to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these securities,
products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not located in Hong Kong & are not conducting Research
Analysis in Hong Kong.
For U.S.
Motilal Oswal Securities Limited (MOSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States. In addition MOSL is
not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States.
Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by MOSL, including the products and services described herein are not available to or intended for U.S.
persons. This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional
investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major institutional
investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and
interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOSL has entered into a chaperoning agreement with a U.S.
registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL, and
therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account.
For Singapore
Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors Regulations and is a
subsidiary of Motilal Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore to accredited investors, as defined in
the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time. In respect of any matter arising from or in connection with the research you could contact the following
representatives of Motilal Oswal Capital Markets Singapore Pte Limited:
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person
or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for informational purpose and may not be used or considered as an offer document or solicitation of
offer to buy or sell or subscribe for securities or other financial instruments. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or
appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment
objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this document should make such investigations
as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult its own advisors to
determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative
products as well as non-investment grade securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of
the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as endorsement of the
views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make modifications and alternations to this statement as may be required from time to time
without any prior approval. MOSL, its associates, their directors and the employees may from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities
mentioned in this document. They may perform or seek to perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities
functions as a separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information that is already
available in publicly accessible media or developed through analysis of MOSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the views expressed therein. This document is
being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not
directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would
be contrary to law, regulation or which would subject MOSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to
certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. Neither the Firm, not its directors, employees, agents or
representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information.
The
person accessing this information specifically agrees to exempt MOSL or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOSL or any of its affiliates or
employees responsible for any such misuse and further agrees to hold MOSL or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this
information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022-3980 4263; www.motilaloswal.com. Correspondence Address: Palm Spring
Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad (West), Mumbai- 400 064. Tel No: 022 3080 1000. Compliance Officer: Neeraj Agarwal, Email Id:
na@motilaloswal.com,
Contact No.:022-30801085.
Registration details of group entities.: MOSL: SEBI Registration: INZ000158836 (BSE/NSE/MSE); CDSL: IN-DP-16-2015; NSDL: IN-DP-NSDL-152-2000; Research Analyst: INH000000412. AMFI: ARN 17397. Investment Adviser:
INA000007100. Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration No.: INP000000670) offers PMS and Mutual Funds products. Motilal Oswal Wealth Management Ltd. (MOWML): PMS
(Registration No.: INP000004409) offers wealth management solutions. *Motilal Oswal Securities Ltd. is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs, Insurance and IPO products. * Motilal Oswal
Commodities Broker Pvt. Ltd. offers Commodities Products. * Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. offers Real Estate products. * Motilal Oswal Private Equity Investment Advisors Pvt. Ltd. offers Private
Equity products
11 January 2018
30