MAS Financial Services Ltd (MASFIN) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator: Ladies and gentlemen, good day, and welcome to the Q2 and H1 FY27 earnings call of MAS Financial Services hosted by Equirus Securities. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectation of the company as on date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. I now hand the conference over to Mr. Shreepal Doshi from Equirus Securities. Thank you, and over to you.
Shreepal Doshi (Equirus Securities): Thank you, Steve. Good afternoon, everyone. We welcome you all to the earnings conference call of MAS Financial Services to discuss the Q2 and H1 FY27 performance of the company. To discuss the company's financial performance, we are pleased to welcome Mr. Kamlesh Gandhi, Chairman and Managing Director, Miss Darshana Pandya, Executive Director and CEO, Mr. Dhvanil Gandhi, Executive Director, Mr. Ankit Jain, Chief Financial Officer, and other senior management team members. On behalf of Equirus, we would like to thank the management of MAS Financial Services for giving us the opportunity to host this call. I would now like to hand over the call to Mr. Kamlesh Gandhi, Chairman and Managing Director for his opening remarks, post which we can open the forum for question and answers. Over to you, sir.
Kamlesh Gandhi (MAS Financial Services Ltd): Thank you so much, Shreepal, and good afternoon to all of you. I'm very happy to connect to all of you once again. I'll be briefing you about the 126th quarter result of this company, and while we have already put the results out on our website and the bourses, but just to give you the brief on how we performed this quarter and the half-year, the AUM grew by 23%. The profitability grew on a consolidated basis, I am talking about consolidated basis first. So, the AUM grew by 23.31%. We crossed a very important milestone once again of 17,000 crores in consolidated AUM. We crossed 16,000 crores in consolidated AUM last quarter. It's 17,000 crores, 17,042 to be precise, this quarter, which translates into a 23, almost 23.5% of growth on an half-yearly basis, followed by a very robust profitability on a half-year basis of 225 crores, which is a growth of 26.54% over the corresponding period. And if we look at the quarter's profitability, then it is 150, on a consolidated basis it is 115 crores, which is close to 26% over the corresponding quarter. So, how we reckon this as a quality growth where the profitability is also robust along with the AUM growth. On a standalone, I'm very, very pleased to share with all of you that our subsidiary, MAS Rural Housing & Mortgage Finance Limited, has also crossed a very important milestone of 1,000 crores this quarter. And we are very optimistic about subsidiary creating a lot of value in near future once it gains traction in terms of further AUM. And our subsidiary registered a very robust profitability of 55% on a over the corresponding quarter with assets with Stage 3 assets of less than 1% to 0.8% to be precise. Even on the parent company
Kamlesh Gandhi (MAS Financial Services Ltd): quality of the assets were maintained at 1.70% net GNPA and a gross GNPA at around 2.62%, signifying a very stable asset quality. And if we talk in terms of the stand-alone profitability is Rs. 110 crore, which is close to 23% rise over the corresponding quarter. And on a half year basis, on a stand-alone basis, it is Rs. 214 crore. So, friends, in short, the performance is well on lines of our expectations. We have always been sharing with all of you that this company will grow anywhere between 20 to 25% depending upon the opportunities we get in the market from time to time prioritizing risk and profitability. We stick to that and we have done this over last 126 quarters and will be continuing to do the same going forward. a very brief on how we do our business. Starting from what matters a lot in the landing industry in the landing business is the capital adequacy. We have a capital adequacy of more than 22% giving us sufficient room to grow further. And as we have always maintained that we have a self-propelling model, we don't have to raise capital very frequently. We were 12,000 crores when we last raised our capital, we're already 17,000 crores. And we don't see raising capital in near future. So, capital adequacy remains very strong, the quality of the assets remains very strong consistent to our belief of extending credit where it is due. And we continue to pursue the same assets which we are doing it. MSME remains our flagship that is MEL, that is the micro enterprise loans, that is loans of smaller ticket size to individual borrowers having small establishments. That we've been doing since many, many decades now. And the SME loans which are higher in ticket size, where we lend right up to 5 crores along with the collateral taken. And that also contributes very significantly to the overall assets. We are also there into wheels. As far as the wheels portfolio is concerned, two-wheeler registered a decent growth, while we continue to be very cautious on our commercial vehicle growth. While the market the market grew at a brisk pace, but we are in process of setting our own distribution and manpower at all the places of our operations, and we see that taking up in the next two to three quarters. The salaried personal loan, as we have shared earlier, we don't intend to get it more than to have more than 10% of our total asset size. So that is around 9%. So this contributes the diversified asset basket, along with our housing finance company at more than 1,000 crores with very robust quality and that company having a very strong capitalization of more than 35% of capital adequacy as I talk to you. So, this was on the asset side, friends. Quickly on the distribution, as you know that we are a multi-distribution company. The test of the distribution is the result any distribution that it can produce for the company in terms of the quality of the assets and in terms of the profitability it can generate over a period of time. Since last 15 years, we have been pursuing a dual distribution. Our direct distribution is around 68% of our assets. Our distribution through NBFC is around 32% of the assets. While maintaining strong very strong currents in both the type of distribution. We increased our number of centers reached this year by sweating our branches. If you're seeing that we are not increasing our branches very rapidly, because what we are doing is that that we are trying to expand the reach of each and every branch sufficiently before we incur the additional expenditure. This is in line of the company's policy over decades of not to substantially upfront the expenditure for expansion. But nevertheless, we have shown a very robust growth in our asset under management of close to 23.5%, in lines with our policy of growing between anywhere between 20 to 25%. Brief on liabilities, while Ankit will take you in detail. Because of our track record and a very strong fundamentals, we have always been ahead of the curve as far as raising liability is concerned, ahead of the time, rather. And we have it's not different this quarter, also. We are almost tied up for the whole year. The only challenge is that that how we navigate to the various rate hikes. So, that was on the
Kamlesh Gandhi (MAS Financial Services Ltd): on the liability side. On the operation side, we continue to pursue very, the tech part of it very, very vigorously. We are in process of having senior management recruits in our digital transformation strategy. While we have gained a lot of traction in our loan origination system which is accompanied by BRE, which is helping us a lot as far as our internal customer, that is, FOS are concerned, and thus providing better services to the borrowers while reducing the operations and the origination cost. We would continue to focus on the same, and that should yield better results as we go ahead. So that was on the operational side. On the HR side, because of the use of technology, the head count is reducing. But nonetheless, we consider HR as one of the most important asset or that creates the balance sheet. Might not show in the balance sheet, but that creates the balance sheet. We are aware of how to have the right set of talents, how to train them, how to retain them. A constant effort is there to do the same, and we see building a team which can continuously contribute to the efficiencies of this organization. Friends, as you know that we have a very strong second line and a core team with the company since 18 to 20 years. But in the same vein, as we grow, we will require a lot of induction of lateral talent also. And that has been done in a calibrated way so as not to increase the cost. And at the same time, we see to that that the organization does not suffer because of the lack of expertise and experience. So the right combination has been worked out, and that should start yielding results in promoting various products even at scale. So we are now at a striking distance away from 20,000 crores. As I talk to you, by the year end, we'll be at a striking distance away from 20,000 crores. So as we grow, there will be different sort of challenges, and let me share with you that we are all ready and prepared to face that, and face that very valiantly and successfully. I think there might be questions pertaining to that, but I would like to to cover this in the opening remark. Two very major headwinds that are perceived to be there for the lending, in the lending industry in special, number one is that how will the rate hike cycle work for us? Now, just to give you the perspective on it, around 70 to 75% of our borrowing is either fixed or MCLR linked, majority being MCLR linked anywhere between 6 to 12 months. So there will not be an immediate rise in the borrowing cost on that part of the borrowing. Even on the repo-based borrowing, we take a reset every 3 months. So we also get some time to readjust our borrowings there also. On the asset side, around in the equivalent proportion, around 65 to 70% of our assets are fixed. The rest are on the floating rates. But the advantage what we have on the fixed assets, and that we have experienced in the past and we have demonstrated in the past, that since the tenure is less, we get the opportunity to reprice. And the borrowers whom we serve are well aware, and at the same time, are not that rate sensitive of 0.25 to 0.5% that might affect our growth substantially. So in short, very difficult to predict the exact implication and exact impact on profitability and NIMs. Suffice to say that in past, we have navigated this successfully without having substantial impact on NIMs and the growth. And we would like endeavor on the same lines this time also, and we hope to achieve the same results what we have achieved in the past. The second is the El Niño and the drought impact. Let me share with you that with all the states that are declared under drought, around 10% of our portfolio is there, but with a very strong caveat that we don't do direct agri. Each and every of our borrower has then allied income. The direct agri is even less than 1%, and accompanied by our stringent underwriting standards, that I have always shared and if you if all of you remember, that the the the worst time for any asset is the best time when it is going through. And being a 30-year-old company, we have understood that very thoroughly. So given our stringent underwriting standards and the nature of the business what we are into and the and the amount of the business which falls under this El Niño effect declared states and areas, we we
Kamlesh Gandhi (MAS Financial Services Ltd): we foresee such a any stress on the on the quality of the assets. While going forward we will as we are we do usually, will be factoring all this impact for our credit delivery and will be extending credit where it is due while endeavoring to maintain a 20% to 25% growth. So friends, this is an overall summary of what we have been what we did in H1, what we intend to do going forward and briefly my colleagues Darshana and Ankit will take you through the detailing on the numbers and then will be open for your queries. Over to you Darshana ben.
Darshana Pandya (MAS Financial Services Ltd): Thank you, sir. Good afternoon, everyone. So as sir covered in his opening comments, this year, this quarter, we have crossed three more milestones in our journey of AUM. So housing book crossed 1,000 crore mark, MFSL book crossed 16,000 crore mark on standalone basis, and consolidated we have crossed 17,000 crore AUM mark. So that has resulted into a robust growth of 23% in AUM. Accordingly, PAT has also grown by on consolidated basis 26% from and that is 115 crore for the quarter. On standalone basis, there is a growth of portfolio of 23.17% from 13,000 crore to 16,000 crore. Total income, there is a growth of around 22% from 459 crore to 560 crore. Profit before tax, there is a growth of around 23% from 120 crore to 147 crore, and profit after tax for the quarter has grown by around 23% from 89 crore to 110 crore. This was about the quarter from Q2 '26 to Q2 '27. Now coming to half yearly results, our total income, there is a growth of around 21% from 902 crore to 1,090 crore. Profit before tax, there is a growth of 24% from 232 crore to 287 crore. Profit after tax, there is a growth of 24% from 173 crore to 214 crore. Here also in MFSL, we have maintained our quality of the portfolio as our focus is always on first on the quality of the portfolio. So the gross Stage 3 asset is 2.63% and net Stage 3 asset is 1.7% as compared to 2.58% gross Stage 3 and 1.70% net Stage 3 in June quarter. And management overlay of 17 crore, we have not netted off from the net Stage 3 assets. Regarding MAS Rural Housing, there is a growth of around 26% in the portfolio from 821 crore to 1,031 crore. Total income, there is a growth of around 23% from 25 crore to 30 crore 54 lakhs. Profit before tax grew by around 52% from 3 crore 90 lakhs to 5 crore 94 lakhs. Profit after tax, there is a growth of 55% from 2 crore 99 lakhs to 4 crore 62 lakhs. About half year, there is a growth of 26% in total income from 48 crore to 60 crore. Profit before tax, there is a growth of 57% from 7 crore 43 lakhs to 11 crore 64 lakhs, and profit after tax also grew by 55% from 5 crore 74 lakhs to 8 crore 89 lakhs. Regarding the quality of the portfolio, it is below 1%. Gross Stage 3 asset is 0.99 as compared to 0.98% in June quarter, and net Stage 3 asset is 0.70 as compared to 0.68% in June quarter. Here also, we have we are carrying 3 crore 69 lakhs as management overlay which has not been netted off from the net Stage 3 assets. So we will continue to grow, as sir mentioned, we'll continue to grow at 20% to 25% grow going forward. And with this positive note, now I'll request Ankit to give us the detail about the liability management.
Ankit Jain (MAS Financial Services Ltd): Thank you, ma'am. Good afternoon to all.
Ankit Jain (MAS Financial Services Ltd): To elaborate on the capital liability management. We see in the current quarter to our strong liquidity profile we were able to maintain an average liquidity on balance sheet of around 1,000 crore. As of 30th September we have already tied up the whole whole year and the sanction on hand is in the access of 2,500 crore. During the quarter we executed direct SME transaction aggregatting to approximately 850 crore. In addition we have sanction on hand of around 850 crore which we expect to utilize during the current quarter. Actually, the off book composition is 17 to 83% in terms of off book and on book. And as a strategy objective it remain it remains to main we are we are committed to maintaining it between 20 20% to 25% as off book to direct SME and other off book transaction. We have a cash credit facility of approximately 100 1,500 crore spread across 13 banking partners. We maintain as with utilizing level of around 80% to 85% during the quarter by keeping the unutilized portion as liquidity buffer. On the long-term borrowing front, we raised around 11.95 crores through term loans and CDN ACBs during the quarter with an average maturity of three to five years. We also we are so around 1,000 1.95 term loan and 5.75 crore was to NCD, which was to mutual funds, retail participants, and wealth houses. We also have ECB of $25 million during the quarter. Additionally, we have sanctioned borrowing lines of around 1,500 crore in terms of long-term borrowing. As on September 30, the company remains well positioned in terms of structural liquidity and with positive cumulative cash flows across all the liquidity brackets. In terms of capital adequacy ratio we maintain strong, which remains strong at 22.12% with Tier-1 capital at 20.82% and debt to equity ratio at 3.50x. The average cost of borrowing during the quarter was 9.19% with restricting a reduction of 43 basis points if we compare with the corresponding period last year, and in the last quarter it was nine it was 9.25%, which is a reduction of six basis points. With the current 25 basis point increase in repo rate by RBI and and expected in further increase of 25 basis point during the year we expect cost of borrowing to increase by 20 25 20 to 25 basis points. Despite of this increase we are confident in enough to minimize the impact of this cost of borrowing increase on ROA and to maintain it as the target targeted level. Overall, we remain adequately capitalized, well funded and comfor comfortably positioned to support our business growth, while maintaining prudent liquidity, comfortable leverage, and a diversified liquid liability profile. So, this was on the capital liability management and now we are open for Q&A. Thank you.
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