MAS Financial Services IPO Rating: Buy with 2 year perspective – JainMatrix


MAS Financial Services IPO is currently open for subscription and JainMatrix Investments has come up with its research note on the public offer. MAS Financial Services IPO rating by the Bangalore-based research firm is positive and it has listed several reasons behind the favourable response although it has counted geographic concentration as a key risk. The IPO is commanding a premium of INR170 – 180 per share. Readers can find the full report at the end of the article, here are some quick points from the research report.

Positives for MAS Financial Services IPO

MAS has a track record of consistent growth with quality loan portfolio.

The return ratios are high and amongst the best in the industry.

MAS has deep market knowledge through sourcing channels. They have developed an extensive operational network in Gujarat and Mah. They entered into commercial arrangements with a number of sourcing intermediaries including commission based DSAs as well as sourcing partners where part of a loan default is guaranteed by the sourcing partner.

Read Also: MAS Financial Services IPO Review: Leverage employed successfully

MAS has an experienced management team. The promoters, Kamlesh Gandhi (CMD) and Mukesh Gandhi (CFO) have over 21 years of experience in financial services.

The asset quality of MAS is stable with NNPAs at 0.92% for FY17. The financials of the company are also good. This is a positive for long term investors.

The unofficial/ grey market premium for this IPO is Rs. 170-180/share. This is a positive.

Risks and Negatives for MAS Financial Services IPO

As a very small player (revenues Rs 365 crores.) MAS may be affected by senior executive exits.

The valuations are on the higher side in terms of P/B at 4.44 times (adjusted post IPO). Additionally as a small company MAS is still asking for rich valuations associated with mid to large companies with good reputations. This is an anomaly.

Promoter shareholding is high. This can affect policies and decision making, and make MAS possibly prone to unilateral decisions not favoring small shareholders.

MAS is facing an increasingly competitive industry, that may affect margins, income and market share. Consumers are being served by a range of financial entities, including, traditional banks, captive finance affiliates, NBFCs and SFB’s approved by RBI to enhance credit penetration.

Geographic concentration: MAS’s business is primarily in Gujarat and Maharashtra. As of FY17, roughly 80% of AUM was located in such states, with Gujarat accounting for 60%.

MAS Financial Services IPO Rating and overall opinion: Subscribe

The BFSI sector has done well over the last few years (barring pockets like PSU Banks) with underpenetration in financial services, a fast growing economy and new emerging sectors and opportunities. In the private sector NBFC space, well managed firms have seen good growth.

MAS has a good record in the regional markets of Guj. and Mah. There is ample scope for growth in these affluent regions.

Strong financials, good asset quality, experienced management and operations in high growth business segments make this issue attractive.

High geographical concentration of AUM and high valuations are key risks for MAS.

At a P/B of 4.44 times (adjusted post IPO), the valuations of the IPO are on the upper side. However strong financials, good asset quality, experienced management and operations in high growth business segments make this issue attractive.

Investors can SUBSCRIBE to this IPO with a 2 year perspective.

Read JainMatrix Investments’ full report on MAS Financial Services IPO rating here



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