Last week, MAS Financial services decided to give 3 rupees dividend and this week they are considering issue of bonus shares. In today’s time where every financial institution is rising capital, why MAS spending the reserves through dividend and Bonus issue.
Disc : Invested.
I don’t see a problem in paying dividends , the company is placed comfortably on Capital (CAR of 24-25% and healthy ROE) this should suffice the company’s growth.
Also, bonus shares has no cash impact. It’s basically an accounting exercise. Reallocation of retained reserves to share capital.
Typically , liquidity increases after bonus issues (as there are more number of shares floating); so this may lead to better price discovery. Other than this I don’t see much upside or downside.
Disclaimer : I’m invested
I was fan of mr.kamlesh and Lt.mukesh ji.
But now my perception about the industry has changed, it’s old era when there is one sided credit demand and 4 or 5 active NBFCs are there.
But now 40+ NBFCs r active , and there is huge competition.
For secure lending there is no space for mas.
And they r not good at unsecured lending. So if I like secure lender then I will go with canara bank like psu. Where 14+ ROE. And 3% div yield. And highest level of corporate governance is there.
And If I like unsecured lending then we can choose Arman or credit access gramin.
So for me mas is not going anywhere in next 5 yr. after jio’s entry.
Disc. Sold
Recently i stumbled on this stock as one large investor added it in his PMS in Q3 FY24
Some positives
Disclaimer- Invested via Advisor & added more after analysing these number
Despite Good results of Q1 FY25, its not appreciated by Market, MAS aim for Loan growth of 20 to 25 percent without compromising asset quality which i think its biggest strength but not liked by Market & present era market is only cheers up above 30 percent growth without caring for Asset Quality/NPA. I think one has to show patience for next 2-3 quaters before Market realizes its strong business modal & financial prudence.
Looks like the market is not rewarding NBFCs in this cycle. CreditAccess Grameen is in a similar territory where price to book ratio has steadily come down. In both cases, balance sheet is steadily growing without compromising on quality. I agree that it is a matter of time these stocks gets rerated. It is a wait and watch game.
Disc: Invested in both CreditAccess and MAS
It is couple of years old video, but we had hosted Mr Kamlesh Gandhi in our series. Had great insights about how they built the business from very scratch.
This video is also helpful from POV of what he was thinking 2 years ago and how they have been able to ‘walk the talk’
State elections and resulting loan waiver by new govt may be the overhang on microfinance NBFCs.
Company has been performing so well but why is the stock not moving upwards?
Would you consider MAS to be extremely undervalued too?
As Banking and NBFC sector is not performing and market participants were busy in other sectors like Defense, Railway and PSU etc
The fall in last two days I guess is because of Fusion Microfinance NPA issue, so market may be expecting that bad or Down Cycle of NBFC had started, I hope if MAS performance remain solid like before in this cycle I(next 2-3 quaters) than it will start performing well compensating for past years also.
Elections and the resulting loan waivers or at least the promise of waiver cause people to delinquent on their repayments.
Natural calamities like floods add to the woes.
But for a growing economy, banks and NBFCs are very important. There may be pain in short term but in the long run their stock prices will perform well. We should consider this suppressed valuations as opportunities to accumulate.
The best part about MAS / Kamlesh Gandhi has been good liabilities side management of the books. Relative conservative approach compared to other NBFCs. With the recent QIP out of the way, focus is to keep monitoring QoQ results and if the AUM growth continues along with targeted branch expansion and if housing loan book can be grown to a bigger share, it is going to do well.
Market will recognize and stock performance will show up once some sort of sector rotation towards NBFCs & lenders happens.
May be this words are superlative, but I think most of the NBFCs will suffer hard after jio s entry.
See they will grasp top level for sure, baki kachra baghega wo NPA ke alawa kuch nahi dega…
This people already down their flags by focusing on home loans, this is something like reinventing the wheel…
Disc. Not invested
Wow !!
you thought NBFC Business was that easy ??
Check History of SKS Microfinance
Check History of Bandhan Bank
If somehow you can link cost of Capital with it i can still understand hesitantly .
Even with Deep pockets likes of HDFC or SBI don’t jump the path.
NBFC needs lot of local understanding, it’s not like you give money and money works for you.
You have to sit with people work with people to thrive. And this sector can go NPA route based on any out of Normal event.
Covid: NPA
Chennai Flood: NPA
Multi District Riots: NPA
Local Outrage\Non Obligation\Suicide if pressured\ Politics : NPA
Sorry If i offended you.
Thanks for detailed reply.
But what I pointed is completely different,
NBFC business is not easy that is not the point…!, bandhan Bank and SKS are completely different story from each other as well as from MAS also.
Mr.Kamlesh born in a town 25km from my town, I have seen them growing from 2 cr to 10k crs.
What strenth they have is pure pure lower penetration of banks and NBFCs.
That’s why they have grown, they have taken 27% on mortgage loans, does it possible in upcoming days.
Now they r focusing on home loans!!!
Can anyone tells me what they will achieve ?
They accepted now there is no room for growth, and to run the show and to protect their AUM they r riding on HL and ML.
Many new NBFC business even if comes will be lesser for the kind of growth India will see in next 10-15 years. Regarding MAS , since stock prices has hardly moved , the sentiments have started to change while in Reality , hardly any major difference has come in the business. So in the case of DCB Bank and City Union. Prices have not moved but businesses are doing fine. MAS is still growing decently in double digits with healthy balance sheet and will continue to grow for many more years. The ocean is too big.
Once the tide turns into NBFCs favours , they will catch up. More important questions rather than stock price movements are :
Disc: I hold stocks of all the company mentioned above therefore my opinion is bound to be biased.
thanks the interview was instructive.
Although, I am invested, I had few questions/issues re: the company. The sub MAS Rural Housing Fin is not a wholly owned sub, but 60% owned sub. Balance 40% is owned by promoters in their individual capacity. So I am not sure if the promoters invested @ the same valuation as the listed co or was their 40% a result of financial engineering?
There are two ways to run the company in India.
First do the business like that Tatas, Reliance , few banks etc…
Second do financial juggling like Paytm, Naykaa, Zomato , Byjus etc…
Now this company will transfer its model from first to second.
As of now they don’t have any business so they will go for subsidies like mass housing finance and will list it…bla bla
But reality is now the old Mas financial ers is over
@Kuldeepjadeja Can you explain how is Zomato doing financial jugglery?
I think it’s Era has not yet started it may not become as big as Tata or Reliance but it’s almost likely that from 5000 cr Marketcap it will become 50,000 Cr market cap in 10 years. Its sufficient for investors.
Remember after chasing all fency and new themes in last Market will come to it’s basic theme and fundamentals till than just accumulate and wait.
