Summary
MAS Financial Services Limited - Q3 FY 2026 Earnings Call Summary Thursday, January 29, 2026, 4:00 PM IST
Event Participants
Executives 4 Ankit Jain (CFO), Darshana Pandya (Director & CEO), Dhvanil Gandhi (Executive Director), Kamlesh Gandhi (Chairman & Managing Director)
Analysts 8 Abhi Jain (AJ Capital), Abhijit Tibrewal (Motilal Oswal), Hardik Doshi (White Whale Partners), Ishank Gupta (Choice Institutional Equities), Jay (Nirmal Bang), Madhuchanda Dey (MC Pro Solutions), Nidhesh Jain (Investec), Shreepal Doshi (Equirus)
Financials & KPIs (Consolidated)
| Metric | Reported | Commentary |
|---|---|---|
| Asset Under Management (AUM) | ₹14,641 crores | +18.28% YoY; driven by festive demand and recovery in eligible demand at ground level. |
| Net Profit (PAT) | ₹97 crores | +20.55% YoY (normalized for Labour Code impact); maintains 10% dividend payout policy. |
| Gross Stage 3 (GNPA) | 2.56% | +3 bps QoQ; slight increase attributed to specific stress in Rajasthan and MP clusters. |
| Net Stage 3 (NNPA) | 1.72% | +3 bps QoQ; management views this as stable given the informal nature of the borrower base. |
| Provision Coverage Ratio (PCR) | ~40% | Guided by Ind AS 5-year historical recovery data; management maintains ₹17.6 cr overlay. |
| Cost-to-Income Ratio | 36% | Remained stable QoQ; reflects costs of fintech partnerships and geographical expansion. |
| Return on Assets (ROA) | 2.87% | Stable; management aims to maintain 2.75%–3.00% range regardless of product mix. |
| Capital Adequacy (CRAR) | 22.85% | Strong capital buffer; Tier-1 at 21.48% with a Debt-to-Equity of 3.35x. |
| Average Cost of Borrowing | 9.53% | -10 bps QoQ; incremental borrowing costs currently at 9.00%–9.25%. |
Geographic & Segment Commentary
- MSME (MEL & SME): The core focus area representing the bulk of AUM. SME assets grew as the company targeted higher ticket sizes and better-quality borrowers, while Micro Enterprise Loans (MEL) remain a high-volume, direct-distribution pillar with GNPA at 2.8% and 1.49% respectively.
- Wheels (2W & CV): Mixed performance as 2-wheeler growth was robust due to tech-stack integration and festive demand, while Commercial Vehicles (CV) saw muted/negative sequential growth. Management slowed CV lending deliberately in Rajasthan and MP after identifying over-leveraging signals.
- Housing Finance (Subsidiary): AUM reached ₹859 crores, growing 23% YoY. While lower than the 30-35% target, management prioritized asset quality (NNPA 0.67%) over growth, expecting a return to higher growth trajectories within 2 quarters.
- Geography: Expanding beyond the core Western India base into North (Delhi NCR, upcoming UP) and South India. South and North teams have stabilized, and management expects these regions to contribute meaningfully to the 20-25% growth target for FY27.
Company-Specific & Strategic Commentary
- Technology & Fintech Integration: Implemented a full-stack LOS and BRE for SME and 2-wheeler segments, enabling real-time disbursements. Collaborations with 3-4 fintechs and one payment company for embedded finance are driving customer acquisition, though they inflate opex due to gross revenue accounting.
- Liability Management: Secured liquidity through September 2026; targeting 20-25% of AUM as off-book through direct assignments and co-lending. The company executed ₹850 crores in direct assignments this quarter.
- Distribution Model: Gradual shift toward direct retail distribution, aiming for a 70:30 or 75:25 ratio against NBFC partnerships over the coming quarters. Currently, NBFC partnerships contribute roughly 33-34% of AUM.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| AUM Growth | 20% – 25% | Management expects to return to this trajectory in 2-3 quarters as “eligible demand” improves. |
| ROA | 2.75% – 3.00% | Target remains consistent; improvements expected from rate cuts and tech-driven operational efficiencies. |
| Housing AUM | 30% – 35% growth | Delayed by 1-2 quarters but remains the mid-term target as the segment recovers from macro stress. |
| Credit Cost | 1.00% – 1.50% | Expected to remain within this range as the GNPA cycle peaks for the MSME industry. |
Risks & Constraints
| Risk | Context |
|---|---|
| Regional Credit Stress | Specific pockets in Rajasthan and Madhya Pradesh (MP) are showing stress in the CV and MSME segments. Management has proactively muted growth in these clusters. |
| Asset Quality Lag | Transition to 90 DPD remains a challenge for informal borrowers. While recovery rates are historically high, current GNPA (2.56%) is slightly elevated compared to historical lows. |
| Opex Pressure | Expansion into new states and fintech revenue-sharing models are keeping the cost-to-income ratio at 36%, limiting immediate margin expansion despite lower borrowing costs. |
Q&A Highlights
Asset Quality & Provisioning
- Question: Why not increase PCR beyond 40% given the Tier-1 capital buffer? (Abhi Jain)
- Answer: Provisions are data-backed per Ind AS 5-year recovery trends; higher provisioning would technically be an “overstatement” of liability. Management prefers carrying the current ₹17.6 cr overlay instead (Kamlesh Gandhi).
Segmental Stress
- Question: What caused the negative sequential growth in the CV book? (Ishank Gupta)
- Answer: Early signals of stress in Light CVs (used) in specific regions led to a deliberate slowdown. Internal static pool analysis guided this caution (Dhvanil Gandhi).
Growth Drivers
- Question: Which products will lead the return to 25% growth? (Shreepal Doshi)
- Answer: SME and Wheels (2W/CV) will be the primary engines. High-yield products like MEL and SPL will contribute steadily but are being capped to manage risk (Kamlesh Gandhi).
Operating Expenses
- Question: Why did “Other Income” and “Opex” rise sharply together? (Shreepal Doshi)
- Answer: Fintech partnership accounting requires booking the full interest as income first, then recording the revenue share to the partner as an expense (Kamlesh Gandhi).
Key Takeaway
MAS Financial Services delivered a steady Q3 FY26 with consolidated AUM growing 18.28% YoY to ₹14,641 crores and PAT increasing 20.55% to ₹97 crores. Performance was characterized by a cautious stance in the Commercial Vehicle segment due to localized stress in Rajasthan and MP, offset by strong momentum in 2-wheelers and SME lending. The company continues to operate with a robust capital adequacy of 22.85% and stable NIMs, supported by a proactive liability strategy that has secured funding through H1 FY27. Strategically, MAS is deepening its tech integration via BRE/LOS and expanding its “Direct Retail” footprint in North and South India. Management expressed confidence in returning to a 20-25% AUM growth trajectory within the next two quarters as the industry-wide MSME credit cycle stabilizes. The focus remains on maintaining a 2.75%–3.00% ROA while prioritizing asset quality over aggressive expansion.
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