MAS Financial Services Limited — Q1 FY26 earnings call

Call held 24 Jul 2025

Management summary

MAS Financial Services Limited delivered a robust Q1 FY26, with consolidated AUM growing 20.43% YoY to INR12,505 crores and PAT increasing 19% YoY to INR84 crores. The company maintained strong asset quality and saw significant growth in its housing finance subsidiary. While operating expenses rose due to retail expansion, management anticipates a reduction in borrowing costs and stable NIMs, focusing on deeper penetration in existing markets and consolidating current product segments.

Highlights

  • Consolidated AUM grew 20.43% YoY to INR12,505 crores.

  • Total Income increased 28% YoY to INR444 crores.

  • Profit After Tax (PAT) grew 19% YoY to INR84 crores.

  • Housing Finance AUM grew 27.40% YoY to INR794 crores, with PAT up 27%.

  • Asset quality remained strong with Gross Stage 3 at 2.49% and Net Stage 3 at 1.63%.

Concerns

  • Operating expenses were up 46% YoY due to upfront investments in retail infrastructure.

  • The Commercial Vehicle (CV) segment experienced slightly higher slippages and volatility compared to other segments.

  • Branch expansion was not vigorous in Q1 FY26 due to past challenges, though expected to pick up in Q3/Q4.

Key financials

  1. AUM ₹12,505 Cr +20.4%YoY
  2. Total Income ₹444 Cr +28%YoY
  3. PBT ₹112 Cr +19%YoY
  4. PAT ₹84 Cr +19%YoY
  5. Gross Stage 3 Assets 2.5% +0.05%QoQ
  6. Net Stage 3 Assets 1.6% +0.01%QoQ
  7. ROA 2.8%
  8. ROE 14%
  9. Capital Adequacy Ratio 25.2%
  10. Tier 1 Capital 23.2%
  11. Debt-to-Equity Ratio 3.36×
  12. Cost of Borrowing 9.8%
  13. Incremental Borrowing Cost 9.3%

What they filed

Q1 FY27: revenue up 19.9%, net profit up 25.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue365 390 417 443 456 +25%481 +23%514 +23%531 +20%
Net profit77 78 81 84 90 +17%90 +15%100 +23%105 +25%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of AUM
₹13,298 Cr Total
  • Microenterprise Loan ₹5,009 Cr 37.7%
  • SME Loan ₹4,525 Cr 34.0%
  • Salaried Personal Loan ₹1,131 Cr 8.5%
  • Commercial Vehicle Loan ₹967 Cr 7.3%
  • Two Wheelers ₹872 Cr 6.6%
  • Housing Finance ₹794 Cr 6.0%

Capital allocation

high confidence
  • Debt Debt disclosed Cost 9.8%
    • New borrowing Raised in term loans with average maturity of 3-5 years. ₹835 Cr
    • New borrowing Raised through non-convertible debentures (NCDs). ₹175 Cr
    On the cost of borrowing for the quarter, which is stood at around 9.80%, with an incremental borrowing cost of 9.25%. In light of the multiple repo rate cut and as communicated in the last quarter call, we anticipate a reduction in borrowing costs by 25 basis points to 35 basis points during the year.
  • Liquidity Cash ₹1,000 Cr · Undrawn ₹250 Cr Average cash and cash equivalents of approximately INR1,000 crores, along with an unutilized cash credit facility of INR250 crores. Sanctioned facilities total INR2,200 crores, with over INR1,500 crores sanctioned for direct assignment and co-lending for the next two quarters.
    On the capital and liability management, this quarter through our effective liability management we have maintained an average cash and cash equivalents of approximately INR1,000 crores, along with an unutilized cash credit facility of INR250 crores. As on June 30th, the company also holds sanction facilities totalling to INR2,200 crores comprising of term loan, direct assignment and co-lending, and other facilities. During the last quarter, the company executed direct assignment transaction amounting to more than INR700 crores. Furthermore, we currently have sanctions of approximately more than INR1,500 crores in the form of direct assignment and co-lending which we plan to utilize over the next two quarters.

Guidance & targets

Volume

  • AUM Growth Volume · Ongoing · High confidence 20-25%
    company targets the growth anywhere between 20% to 25% with the belief that we prioritize quality of the portfolio, profitability and the operations is guided by the discovering the growth at the marketplace rather than just determining it.

    — Kamlesh Gandhi, Chairman and Managing Director

  • AUM Volume · Next 3 years · High confidence Next INR13,000 crores
    It took us around 30 years for this INR13,000 crores. Next INR13,000 crores should come within the next 3 years.

    — Kamlesh Gandhi, Chairman and Managing Director

  • Housing Finance AUM Volume · This year · High confidence INR1,000 crores
    We are around INR795 crores. We are confident to touch INR1,000 crores this year, with once again very robust figures in terms of profitability, in terms of the assets' quality.

    — Kamlesh Gandhi, Chairman and Managing Director

  • Salaried Personal Loan share of AUM Volume · Ongoing · High confidence 10%
    salaried personal loan grew by 92%, from INR590 crores to INR1,131 crores, this is in the consonance with our planning to have 10% share of this product in our total AUM, so which is still below 10% of our total AUM.

    — Darshana Pandya, Director and Chief Executive Officer

  • Total AUM before new segments Volume · Long-term · High confidence INR20,000-25,000 crores
    We want to consolidate on these segments that we have currently, that is, those are enough, in our view to grow the book, till at least INR20,000 crores to INR25,000 crores, and maybe after that we can take a fresh cut to see that if we want to add any other segment or not, but for now we think the segments are enough.

    — Dhvanil Gandhi, Executive Director

Other

  • Net Worth Other · Next 5-6 years · High confidence Next INR2,700 crores
    Next INR2,700 crores would come within the next 5 years or 6 years.

    — Kamlesh Gandhi, Chairman and Managing Director

  • Off-book assets (Direct Assignment & Co-lending) Other · Ongoing · High confidence 20-25% of AUM
    Our strategic goal is to maintain 20% to 25% of assets under management as off book through Direct assignment and co-lending transactions.

    — Ankit Jain, Chief Financial Officer

  • NCDs as % of resource mix Other · Next 2-3 years · Medium confidence ~25%
    So, already, if you see, around 18%, 19% is our ancillary capital market, which is NCD. We see that this number in the next two years, three years will be around 25%.

    — Ankit Jain, Chief Financial Officer

  • ECB borrowing as % of resource mix Other · Next 2-3 years · Medium confidence ~10%
    Also, we will be adding up to the ECB borrowing, which can be DFIs and even foreign commercial banks. That will add up around 10% in the next two years, three years.

    — Ankit Jain, Chief Financial Officer

Margin

  • NIM Margin · Steady state basis · High confidence 7-8%
    But, on a steady state basis we stick to our guidance that will maintain NIMs anywhere between 7% to 8% and ROAs anywhere between 2.75% to 3%.

    — Kamlesh Gandhi, Chairman and Managing Director

Profitability

  • ROA Profitability · Steady state basis · High confidence 2.75-3%
    But, on a steady state basis we stick to our guidance that will maintain NIMs anywhere between 7% to 8% and ROAs anywhere between 2.75% to 3%.

    — Kamlesh Gandhi, Chairman and Managing Director

Debt

  • Borrowing Cost Reduction Debt · During the year · High confidence 25-35 basis points
    In light of the multiple repo rate cut and as communicated in the last quarter call, we anticipate a reduction in borrowing costs by 25 basis points to 35 basis points during the year.

    — Ankit Jain, Chief Financial Officer

What to watch in Q2 FY26

Borrower Financial Stress Improvement

1-2 quarters
Current Slight improvement, not cognizable yet; borrowers still under financial stress.
Target Marked difference, eligible demand pickup, improved portfolio quality.

Why it matters

Indicates overall economic health and future asset quality/growth trajectory for the company.

So but having said that, there is slight improvement over what it was 6 months back, if you talk about last 3 months, but not that cognizable and we foresee that, still if we take a quarter or two for us to see a marked difference, whereby the eligible demand picks up and overall the portfolio quality improves and there's sufficient liquidity for the borrowers to fund their businesses, we still see that to be a quarter or two away.

Risks & concerns

  • Borrower Financial Stress

    medium

    Borrowers are still under financial stress, and economic growth has not fully reached them; 1-2 quarters expected for marked improvement.

    Management acknowledged

  • FMCG Sector Volatility

    medium

    FMCG sector is 'yet to stabilize' compared to textile, indicating ongoing challenges.

    Management acknowledged

  • Commercial Vehicle (CV) Segment Volatility and Slippages

    medium

    CV is the only segment with slightly higher slippages than the book average and is 'slightly volatile' by nature.

    Management acknowledged

Q&A highlights

8 direct
Opex Growth and Retail Expansion Strategy Direct
So as I shared earlier that we are moving aggressively to build up our retail infrastructure and when you build up a retail infrastructure, the opex is a little upfronted, but in our case, if you see that we have been doing it in a very planned manner so as not to disturb our ROAs and ROES on an overall basis.

Explains the reason for high opex growth (46% YoY) as a strategic investment in retail infrastructure for future growth, aligning with the shift towards direct lending.

Asked by Hardik

Salaried Personal Loan (SPL) Contribution and Future Growth Drivers Direct
So, what I would like to state here is that that, SPL cannot be the major driver, is one of the drivers, but because it's on a lower base. So, if you see our increasing AUM over last, year, 60% of the increase is coming from our MSME business, that is the main business and the rest from wheels and then from SPL.

Clarifies that while SPL has grown significantly, MSME and wheels will remain the primary growth drivers, with SPL's contribution capped at around 10% of AUM.

Asked by Hardik

Impact of RBI FLDG Norms Direct
The final guidelines are yet to be out, but the good thing is that that, what all the NBFC-to-NBFC partnerships were there and there were no guidelines at all, with RBI coming with guidelines, there'll be a lot of clarity. I'm happy to share that that majority of the suggestions given by the industry has been well taken by the regulator.

Management views the upcoming RBI guidelines on FLDG as a positive development that will bring clarity and boost the partnership business, indicating a favorable regulatory environment.

Asked by Hardik

NIM Trajectory and Rate Cut Benefits Direct
So, we are yet to experience the reduction in cost and hence there has not been any passing of the cost reduction to the borrowers. So, this is because of the internal realignment of the portfolio within the retail assets and increasing of retail assets from time to time. ... It should, because there is always a time lag, at the ground level by the time we get and by the time we pass on and it stabilizes over a period of time later on.

Explains that current NIM improvement is due to portfolio shifts, and the benefits of MCLR rate cuts (25-35 bps reduction in borrowing costs) are yet to be fully realized and passed on, implying future NIM upside.

Asked by Madhuchanda Dey

Borrower Behavior and Asset Quality Stress Direct
We can see slight improvement, not that cognizable yet, because of two facts, that the borrowers are yet to come out of their financial and liquidity stress given the over leverage that they had done in the past that is not going to be wished away soon. And secondly, still, the steady state consistent economic growth is yet to achieve and yet to reach to the borrowers whom we serve.

Provides a realistic assessment of borrower stress, indicating slight improvement but noting that a full recovery and significant pickup in demand may still be 1-2 quarters away.

Asked by Madhuchanda Dey

Geographical Expansion Strategy Direct
But I think, we will with another two quarters, three quarters and if we take another two quarters of working from Q3 and Q4, we'll be in a position to expand our branches in our areas of operation that is, west, north and south, and it will be penetrating on those areas rather than, taking up more territories. So, we'll be working in the geographies that we are working, but we'll have some deeper penetration in all those geographies.

Outlines the strategy to focus on deeper penetration in existing geographies (West, North, South) in Q3/Q4 rather than expanding into new markets, indicating a cautious and focused growth approach.

Asked by Madhuchanda Dey

Commercial Vehicle (CV) Portfolio Performance Direct
So there, the disbursement was a little slow in this Q1. Difficult to predict about the coming quarters. But as in Q1, we were not very rather we were not very comfortable picking up numbers there. And in terms of the quality of the portfolio, it has maintained. The stage 3 as far as our CV portfolio is concerned is around 4%.

Highlights that the CV portfolio experienced slow disbursements in Q1 due to eligibility stress and management's discomfort, with Stage 3 at 4% and Stage 2 at 9%, making it a segment to watch for asset quality.

Asked by Pawan

Co-lending Reporting Change Direct
So, for better control, we had -- in terms of co-lending, we are taking the entire cash flow first on our books and then the cash flow is distributed to the partner as per the agreed terms, as against the formal norms where each partner would take their share. So, that has changed slightly, because and this is stemming out of the fact for better control on the partners.

Explains a change in co-lending reporting where the company now books the entire cash flow first, which impacts how it's reflected in opex, indicating a move towards better control and alignment with the business model.

Asked by Shreepal Doshi

3 min read 8 chapters

Detailed narrative

Q1 FY26 Performance Overview and Strategic Vision

MAS Financial Services Limited reported a strong Q1 FY26, marking its 30th year of operations. Consolidated AUM grew 20.43% YoY to INR12,505 crores, with total income up 28% to INR444 crores and PAT increasing 19% to INR84 crores. The company aims for 20-25% growth, prioritizing portfolio quality and profitability, and aspires to add the next INR13,000 crores in AUM within three years and INR2,700 crores in Net Worth within 5-6 years.

Asset Quality and Profitability Metrics

The company maintained robust asset quality, with Gross Stage 3 Assets at 2.49% and Net Stage 3 Assets at 1.63% for Q1 FY26, showing slight improvement from Q4 FY25. ROA stood at 2.84% and ROE was close to 14% on an expanded capital base. Management expects NIMs to be maintained between 7-8% and ROAs between 2.75-3% on a steady-state basis, with further upside anticipated from future rate cut benefits.

Segmental Growth and Portfolio Mix

The MSME segment was a primary growth driver, contributing 60% to the AUM increase. Microenterprise loans grew 10.73% to INR5,009 crores, and SME loans increased 19.61% to INR4,525 crores. Salaried Personal Loans saw a significant 92% YoY growth to INR1,131 crores, though the company plans to cap its share at 10% of total AUM. The Commercial Vehicle segment's AUM grew 18.33% to INR967 crores, but experienced slower disbursements and slightly higher slippages in Q1.

Distribution Network and Expansion Strategy

MAS Financial operates through 206 branches, with 65-66% of its business generated through its retail network across 14,500 pin codes, and the remainder from NBFC partnerships. While branch expansion was not vigorous in Q1, the company plans to resume aggressive expansion in Q3 and Q4, focusing on deeper penetration in existing Western, Northern, and Southern geographies. The long-term objective is to increase the retail distribution mix to 70-75% over the next 6-12 quarters.

Liability Management and Cost of Funds Outlook

The company is well-capitalized with a Capital Adequacy Ratio of 25.22% and Tier 1 Capital of 23.19%. The cost of borrowing for Q1 FY26 was 9.80%, with incremental borrowing at 9.25%. Management anticipates a 25-35 basis point reduction in borrowing costs during the year, starting this quarter, due to repo rate cuts. The company raised INR835 crores in term loans and INR175 crores in NCDs this quarter, with plans to raise an additional INR400-500 crores via NCDs.

Housing Finance Subsidiary Performance and Outlook

The housing finance subsidiary demonstrated strong performance, with AUM growing 27.40% YoY to INR794 crores and PAT increasing 27% YoY to INR2.76 crores. The company is confident of reaching INR1,000 crores in Housing Finance AUM this year, maintaining robust profitability and asset quality (Gross Stage 3 at 0.92%). This segment is seen as a key contributor to overall growth, consistent with the company's focus on quality asset creation.

Future Growth and Product Strategy

Management reiterated its AUM growth target of 20-25% and stated that the next INR13,000 crores in AUM should be achieved within three years. The company is not planning to open new product segments currently, preferring to consolidate on existing ones (MEL, SME, PL, Wheels) until AUM reaches INR20,000-25,000 crores. A pilot for used cars is underway, currently classified under the CV portfolio, indicating potential for future product diversification within existing categories.

Resource Diversification and Off-Book Strategy

MAS Financial is actively diversifying its resource mix, aiming to increase the share of NCDs to approximately 25% (from current 18-19%) and introduce ECB borrowings to about 10% within the next 2-3 years. The strategic goal is to maintain 20-25% of assets under management as off-book through Direct Assignment and co-lending transactions, with over INR1,500 crores in sanctions for these channels for the next two quarters.

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