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. Companys business and financing is in five
categories i.e. micro-enterprise loan, SME loans, two wheeler loans, commercial
vehicle loans and housing loans. Companys 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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