Can MAS Financial sustain its outperformance on strong growth momentum?

Synopsis

MAS Financial Services (MFSL) has seen a 9% stock gain, outperforming its sector index, driven by double-digit disbursement growth and improving margins. The company aims for ₹1,00,000 crore AUM by 2036, with analysts maintaining a 'buy' rating and raising targets due to attractive valuations and strong growth prospects.

ET Intelligence Group: MAS Financial Services (MFSL), a mid-tier micro, small and medium enterprises (MSME) financier, has gained 9% over the past month, outperforming the 2% gain in the BSE Financial Services index. The company reported double-digit growth in disbursement and improving margin profile. It plans to touch ₹1,00,000 crore in consolidated assets under management (AUM) by 2036 from ₹14,641 crore at the end of December 2025, driven by loan segments including MSME, vehicles, and housing. Analysts have retained a 'buy' rating on the stock and have raised the target price by 7-9% citing attractive valuation amid improving return ratios and double-digit AUM growth.

The company posted double-digit year-on-year growth in AUM, revenue and net profit for the December 2025 quarter as well as for the first nine months of the current fiscal year (FY26). While this was encouraging, what appealed to investors was the management's intention to approach the demand revival in the loan market cautiously with focus on asset quality. It implies that the company would not indulge in high-risk bets while chasing the targeted loan growth over the next decade, which will require an annual AUM growth of 30-35%. This is critical given the rising trend in the gross non-performing assets (GNPA). The asset quality ratio has increased in each of the 10 quarters to 2.6% in the December quarter from 2.1% in the June 2023 quarter.

Agencies

Big plans Co has reported double-digit growth in assets, revenue and profit in Q3 and hopes to have ₹1L-crore in assets by 2036

MFSL operates across India through 208 branches. The top four states including Gujarat, Rajasthan, Madhya Pradesh and Maharashtra host nearly 88% of the branches. On a standalone basis, the company has five loan segments including micro enterprises, SME, 2-wheelers, commercial vehicles and salaried personal loans. Of this, micro and SME segments form three-fourth of the standalone loan book of ₹13,782.3 crore. The company also has a rural housing finance subsidiary. Its AUM increased by 22.5% year-on-year to ₹859.2 crore or 6% of the consolidated AUM in the December quarter.

Apart from its own branches, MFSL has tied up with 215 business partners. The company considers this partnership as a major catalyst in accelerating the loan book over the next decade. The management has guided for 20-25% AUM growth and return on assets (RoA) of 2.75-3% in the medium-to-long term. In the December quarter, it clocked an RoA of 2.9%.

"The company is expected to benefit from continued downward repricing of borrowings with incremental cost of funds (CoF) ranging between 9-9.25% versus 9.5% for the December quarter," noted Axis Securities in a report highlighting that the management expects another 10 basis point reduction in CoF for the March quarter. The broking firm believes that current valuation offers scope for meaningful re-rating on the back of steady performance. It has raised the stock price target by nearly 7% to ₹405.

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