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IPO Note- MAS Financials Services Ltd

“MAS Financial Services (MAS) is a Gujarat based NBFC, which is two decades old. It primarily lends to Micro Enterprises (ME) and SME, which contribute 60% and 23% of its AUM respectively. Company’s business and financing is in five categories i.e. micro-enterprise loan, SME loans, two wheeler loans, commercial vehicle loans and housing loans. Company’s AUM has grown at healthy 33.4% CAGR over FY2013-17 with strong asset quality (GNPA -1.1%, NNPA -0.9%).
High valuations underpinned by high growth potential and profitability: Close peers, Capital First and Shriram City Union Finance are trading at ~3x FY2017 book, however, both the companies report moderate ROE of 11%. At the upper end of the price band, MAS is valued at 6.85x of FY2017 book value (Pre-IPO) and on post-dilution basis at 4.1x of Book value. Although valuations are on the higher side, looking at the strong and sustainable growth and ROE prospects of the company, we recommend a Subscribe to the issue.”

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