2:1 Bonus, 5.10% Dividend & Rs 2,000 Crore Fundraising Soon, NBFC Stock Attractive To Buy; 25% Upside Seen

Smallcap NBFC, Mas Financial Services is an attractive bet to add to your portfolio after its Q4 results. Axis Securities is the latest to recommend BUY on MAS Financial due to its healthy quarterly report and measures to push growth pedals ahead. Apart from Q4, MAS has also announced a 5.10% dividend payout and fundraising of a whopping up to Rs 2,000 crore via NCDs and commercial papers, which are key positives. Notably, this comes after MAS delivered bonus shares in the ratio of 2:1.

Currently, there is a buy-on-dips opportunity in MAS Financial as the stock price ended at Rs 304.95 apiece on NSE down by 1.21% on April 26 with a market cap of Rs 5,000.76 crore. The stock's 52-week high and low are at Rs 387.95 and Rs 228.68 apiece respectively.

MAS Financial Services Earnings:

In Q4FY24, MAS earned PAT of Rs 68.05 crore, up by 22.50% YoY, while total income stood at Rs 329.53 crore up by 23.04% YoY. FY24 PAT stood at Rs 247.75 crore, up by 23.28% YoY, and total income shot up by 30.29% YoY in the fiscal to Rs 1,224.57 crore.

Meanwhile, FY24 assets under management came in at Rs 10,125.61 crore, up by 25.21%. The portfolio quality remained stable and strong at 2.25o/o gross stage 3 assets and 1.51% net stage 3 assets of AUM as compared to 2.23% gross stage 3 assets and L.48% net stage 3 assets of AUM as of 31't December 2023. Also, the company continues to carry a management overlay of ( 18.79 Crores as of 31't March 2024, O.24% of the on-book assets.

MAS Financial Upcoming Dividend:

This NBFC player has recommended a final Dividend of Rs. 0.51 per Equity share i.e. 5.10% of the face value of Rs. 10/- subject to the approval of the shareholders at the ensuing Annual General Meeting (AGM) of the Company. The date from which the dividend will be paid or demand draft/warrants thereof will be dispatched to the shareholders and, if approved by the shareholders will be informed to the Stock Exchange subsequent upon decided by the Board.

Earlier, for FY24, MAS Financial paid an interim dividend of Rs 3 per share or 30%. In FY23, the company paid dividends up to 36.50% amounting to Rs 3.65 per share.

Currently, it has a dividend yield of 1.2%.

MAS Financial Fundraising:

Further, MAS has received approval for the borrowings of funds by way of issuance of secured/unsecured Non - Convertible debentures and commercial papers up to an aggregate amount of Rs. 1500 crores and Rs. 500 Crores respectively, in one or more
tranches through private placement basis.

MAS Financial Bonus Issue:

MAS Financial in February month allotted 10,93,24,086 fully paid up equity shares of Rs.10/- each as fully paid bonus equity shares to the eligible Members of the Company whose names appear in the Register of Members of the Company/List of Beneficial Owners as on the Record Date i.e., February 22, 2024, in the ratio of 2:1 i.e. 2 (Two) new fully paid-up Equity Share of Rs.10/- each is issued for every 1 (One) existing fully paid-up Equity Share.

Accordingly, the bonus issue is in the ratio of 2:1.

Axis Securities Recommendation On MAS Financial Services:

Giving an outlook, Axis Securities note said, "The ramping-up of the direct distribution network will support MAS' ambitious growth plans. While the ramp-up in distribution would entail higher Opex, MAS will be able to maintain its RoAs at least in the near term on account of better yields and largely steady credit costs backed by stable asset quality. Thus, we expect MAS to deliver healthy RoA/RoE of 3-3.1%/16-18% over FY25-26E."

Explaining in detail its rationale for buying, Axis Securities highlighted three key factors. They are:

1. Strengthening direct distribution:

The company will also look to further strengthen its geographical presence to reduce its dependence on the Top 4 states. While the core geographies in the West have immense growth potential, having pre-empted the growth potential in the targeted geographies, MAS plans to foray into Delhi NCR, Tamil Nadu, Karnataka and Telangana to kickstart its next leg of growth. Over the medium term, MAS expects the newer geographies to contribute meaningfully to its endeavour to double AUM over the medium term.

2. Eyeing 2x AUM in the next 3 years:

MAS will look to foray into Used Cars (currently in the pilot phase) and Supply Chain Financing (as a sub-set of MSME loans for New and Existing customers). In terms of the salaried personal loans, MAS will cap its mix at 10% of overall AUM. Additionally, MAS expects to scale up the housing finance portfolio meaningfully, thereby increasing its contribution to the consolidated AUM. We expect MAS to deliver a healthy ~24% CAGR AUM growth over FY24-26E.

3. Recent rating upgrade to aid CoF:

Recently, MAS's credit rating was upgraded to AA- (Stable) from A+ (Positive) by CARE. This rating upgrade will aid CoF improvement by 15-25bps over the next 6-9 months. Given that a larger chunk of the company's borrowings are MCLR, the company will negotiate rates with its lenders considering the upgrade. This will also enable MAS to tap borrowings in the capital market.

Hence, Axis Securities said, "We maintain our BUY recommendation on the stock."

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns. in advises users to consult with certified experts before making any investment decision.