MAS Financial Services Limited — Q2 FY26 earnings call

Call held 6 Nov 2025

Management summary

MAS Financial Services reported a robust Q2 FY26, demonstrating consistent growth in AUM and profitability across both standalone and housing finance segments. Despite a challenging MSME sector, the company maintained strong asset quality and capital adequacy. Management expressed confidence in achieving its long-term AUM target, driven by diversified distribution, operational efficiencies, and a strategic focus on asset quality.

Highlights

  • Consolidated AUM grew 18.32% YoY to INR13,821 crores in Q2 FY26.

  • Consolidated PAT increased 17.79% YoY to INR91.43 crores in Q2 FY26.

  • Standalone AUM grew 18% YoY to INR12,999 crores, with PAT up 17.15% to INR89.70 crores.

  • Housing Finance AUM surged 23.65% YoY to INR821.70 crores, and PAT grew 25.90% to INR2.99 crores.

  • Net Stage 3 assets for the standalone entity stood at 1.69% (Sep 2025), while for Housing Finance, it was 0.66%.

  • Debt-to-equity ratio was 3.39x, with a strong capital adequacy ratio of 24.57% (Tier 1 at 22.7%).

  • Management reiterated its long-term vision of achieving INR1 lakh crore AUM within a decade.

Key financials

  1. Consolidated AUM ₹13,821 Cr +18.3%YoY
  2. Consolidated PAT ₹91.43 Cr +17.8%YoY
  3. Standalone AUM ₹12,999 Cr +18%YoY
  4. Standalone PAT ₹89.7 Cr +17.2%YoY
  5. Standalone Net Stage 3 1.7% +3.7%QoQ
  6. Debt-to-Equity Ratio 3.39×

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
₹13,820.7 Cr Total
  • Micro Enterprise Loan ₹5,210 Cr 37.7%
  • SME Loans ₹4,633 Cr 33.5%
  • Salaried Person Loan ₹1,173 Cr 8.5%
  • Commercial Vehicle ₹1,059 Cr 7.7%
  • 2-Wheeler Loans ₹924 Cr 6.7%
  • Housing Finance ₹821.7 Cr 5.9%

Guidance & targets

AUM

  • Total AUM AUM · within a decade · High confidence INR1 lakh crore
    We had dedicated ourselves on the purpose of taking this organization to INR1 lakh crore AUM within a decade.

    — Kamlesh Gandhi, Chairman and Managing Director

  • AUM before next capital raise AUM · ongoing · Medium confidence INR20,000 crores to INR22,000 crores
    this equity is good till say, INR20,000 crores internal accruals and the current healthy capitalization levels. That is what we understand INR20,000 crores, INR22,000 crores is a good level at which we would like to go once again.

    — Kamlesh Gandhi, Chairman and Managing Director

AUM Growth

  • QoQ Growth (Q3 on Q2) AUM Growth · Q3 FY26 · Medium confidence 5% to 7%
    The Q3 growth on Q2 can be anywhere between 5% to 7% and will increase gradually, thereby, once again, getting to our original stride of being anywhere between 20% to 25%, pick up a mean of around 22.5% to 23% in near term.

    — Kamlesh Gandhi, Chairman and Managing Director

  • Near-term AUM Growth AUM Growth · near term · Medium confidence 22.5% to 23%
    getting to our original stride of being anywhere between 20% to 25%, pick up a mean of around 22.5% to 23% in near term.

    — Kamlesh Gandhi, Chairman and Managing Director

Profitability

  • ROA Profitability · ongoing · Medium confidence 3%-plus

    From around 2.85% today

    we are close to around 2.85% in ROAs where the efforts are very earnestly made to reach around 3%-plus.

    — Kamlesh Gandhi, Chairman and Managing Director

  • ROA Profitability · ongoing · Medium confidence 2.75% to 3%
    we strategically intend on ROAs anywhere between 2.75% to 3%.

    — Kamlesh Gandhi, Chairman and Managing Director

  • ROE Profitability · long term · Medium confidence 15% to 17%
    a reasonable debt to equity of anywhere between around 4% to 4.5% should give us ROEs ranging from 15% to 17%, which should be the right expectation in the long term from a lending business at our size.

    — Kamlesh Gandhi, Chairman and Managing Director

Asset Quality

  • Net NPA Asset Quality · steady state · High confidence 1.5% to 2%
    We have always talked about a net NPA anywhere between 1.5% to 2% and gross NPA between 2.5% to 2.75% has been maintained by and large.

    — Kamlesh Gandhi, Chairman and Managing Director

  • Gross NPA Asset Quality · steady state · High confidence 2.5% to 2.75%

    — Kamlesh Gandhi, Chairman and Managing Director

  • Zero DPD Asset Quality · steady state · Medium confidence 92% to 95%
    under normal situation, we see that anywhere between 92% to 95% on zero DPD because the type of the borrowers we serve, zero DPD will be at that point.

    — Kamlesh Gandhi, Chairman and Managing Director

Debt

  • Debt-to-Equity Ratio Debt · long term · Medium confidence 4% to 4.5%
    a reasonable debt to equity of anywhere between around 4% to 4.5% should give us ROEs ranging from 15% to 17%

    — Kamlesh Gandhi, Chairman and Managing Director

Operating Cost

  • Opex Ratio (as % of assets) Operating Cost · going forward · Medium confidence 2% to 3%
    we presume that our operational cost will remain anywhere between 2% to 3% and between 35% to 38% of interest income.

    — Kamlesh Gandhi, Chairman and Managing Director

  • Opex Ratio (as % of interest income) Operating Cost · going forward · Medium confidence 35% to 38%

    — Kamlesh Gandhi, Chairman and Managing Director

Housing Finance

  • Housing Finance AUM Housing Finance · next 3 to 4 years · High confidence INR4,000 crores to INR5,000 crores
    Our housing finance company is going to be value accretive for the parent to start with. On the details of it, yes, we would like to list this separately with the next 3 to 4 years or when we reach a critical mass of, say, anywhere around INR4,000 crores to INR5,000 crores AUM.

    — Kamlesh Gandhi, Chairman and Managing Director

  • Housing Finance AUM Growth Housing Finance · ongoing · Medium confidence 30% to 35%
    We intend to grow this subsidiary at a rate of around 30%, 35%, depending upon the opportunity that we get from time-to-time.

    — Kamlesh Gandhi, Chairman and Managing Director

  • Housing Finance AUM Housing Finance · in 5 years · High confidence INR3,000 crores, INR4,000 crores
    Now from the current close to INR800 crores, we are talking that if we can grow at around 30%, it can be around INR3,000 crores, INR4,000 crores in 5 years.

    — Kamlesh Gandhi, Chairman and Managing Director

Capital Raise

  • Capital Raise Frequency Capital Raise · long term · Medium confidence every 3.5 to 4 years
    There will be equity raise every 3.5 to 4 years.

    — Kamlesh Gandhi, Chairman and Managing Director

Risks & concerns

  • Challenging MSME sector due to overleverage

    medium

    The MSME sector has been challenging for over 4 quarters, primarily due to past overleverage by lenders, which is now settling.

    Management acknowledged

  • SME sector specific stress (Textile, FMCG, Gems & Jewelry)

    medium

    The company remains cautious on sectors like textile and FMCG, which were on their caution list even before tariff-related pressures, but has not seen further deterioration.

    Management acknowledged

  • Volatility in DPD (less than 90 days)

    low

    Volatility in less than 90 DPD is expected during current times, but the company remains vigilant and aims for 92-95% zero DPD.

    Management acknowledged

Areas of evasion (2)

  • Exact timeline for ROA improvement to 3%
  • Precise quantification of future equity dilution

Q&A highlights

3 direct
Asset Quality Trajectory (DPD increase) Direct
See, the asset quality in this class will always remain range bound. We have always talked about a net NPA anywhere between 1.5% to 2% and gross NPA between 2.5% to 2.75% has been maintained by and large. Secondly, if we digest it very minutely, the impact is because of the current scenario, which we have seen in the sectors where we have served.

Analysts questioned the increasing DPD, and management explained it as range-bound volatility due to the current market scenario and increased direct retail exposure, while maintaining long-term NPA targets.

Asked by Aryamaan Agarwal

Opex Ratio Increase Direct
See, opex is a combination of a few things, lesser-than-expected disbursement, as I shared that we always, every quarter, try and go out in the market to get the maximum eligible borrowers in our fold. With the current scenario, the rejection ratios are very high. One of the reasons for the opex was that as I shared with you that the 15,000 distribution points, it has to be staffed properly. We had an increase in the employee cost also that reflects in the fees and commission because those have to be confirmed the same is taken into fees and commission.

Management provided a detailed breakdown of factors contributing to the higher opex ratio, including lower disbursements, increased staffing for distribution, and fintech commissions, while projecting future stability.

Asked by Aryamaan Agarwal

Housing Finance Subsidiary Growth & Listing Plans Direct
Our housing finance company is going to be value accretive for the parent to start with. On the details of it, yes, we would like to list this separately with the next 3 to 4 years or when we reach a critical mass of, say, anywhere around INR4,000 crores to INR5,000 crores AUM. We intend to grow this subsidiary at a rate of around 30%, 35%, depending upon the opportunity that we get from time-to-time.

Management outlined a clear strategic path for the housing finance subsidiary, including AUM targets for a potential separate listing and expected growth rates, indicating future value creation.

Asked by Aditya Khandelwal

3 min read 7 chapters

Detailed narrative

Robust Q2 FY26 Performance & Long-Term Vision

MAS Financial Services reported a strong Q2 FY26, marking its 122nd consecutive quarter of robust financial performance. Consolidated AUM grew 18.32% YoY to INR13,821 crores, with consolidated PAT increasing 17.79% YoY to INR91.43 crores. The company reiterated its ambitious long-term vision to achieve INR1 lakh crore AUM within a decade, emphasizing a purpose-led and progress-driven approach that has historically delivered a 20% CAGR in AUM and 22% CAGR in profitability over the last decade (2015-2025).

Diversified Asset & Distribution Strategy

The company continues to pursue a diversified asset strategy, with MSME loans currently contributing around 75% and other products 25%. The goal is to shift this to 65-70% MSME and 30-35% other products at the INR20,000 crore AUM mark. In terms of distribution, MAS Financial has expanded its reach to 15,000 pin codes and maintains partnerships with approximately 200 NBFCs, which contribute about 35% of its business. The company aims to increase direct distribution to 70-75% over the next 2-3 years.

Asset Quality & Operational Efficiency Focus

Asset quality remained stable, with standalone net Stage 3 assets at 1.69% as of September 30, 2025, compared to 1.63% in June 2025. Management targets maintaining net NPA between 1.5% to 2% and gross NPA between 2.5% to 2.75%. Operational costs increased slightly due to lower disbursements, increased staffing for 15,000 distribution points, and commissions to fintech partners. The company aims to keep its opex ratio between 2-3% of assets or 35-38% of interest income, focusing on technology adoption with a 100-person tech team and in-house tech stack development.

Liability Management & Capital Adequacy

MAS Financial is strongly positioned with a capital adequacy ratio of 24.57% and Tier 1 capital at 22.7%. The debt-to-equity ratio stood at 3.39x. The company raised INR900 crores through term loans and INR450 crores via NCDs during the quarter. The average cost of borrowing for the quarter was 9.62%, 21 basis points lower YoY, with incremental borrowing at 9.25%. Management aims to maintain a debt-to-equity ratio of 4-4.5% to achieve ROEs of 15-17% in the long term.

Housing Finance Subsidiary & New Insurance Broking Venture

The housing finance subsidiary (MRHMFL) showed strong growth, with AUM increasing 23.65% YoY to INR821.70 crores and PAT up 25.90% to INR2.99 crores. Net Stage 3 assets for MRHMFL were 0.66%. The company plans to grow this subsidiary at 30-35% annually, targeting INR4,000-5,000 crores AUM in the next 3-4 years before considering a separate listing. Additionally, MAS Financial received IRDAI approval for its insurance broking business, MASFin Insurance Broking, which will initially focus on captive business.

Market Outlook & MSME Sector Dynamics

Management acknowledged that the MSME sector has been challenging for the past four quarters, primarily due to past overleverage by lenders, which is now stabilizing. They expressed confidence that the challenging cycle is concluding, with an increase in eligible borrowers observed in September and October. The company anticipates Q3 growth of 5-7% QoQ and a return to 20-25% AUM growth in the near term, driven by improving market conditions and a focus on risk management.

Addressing Asset Quality & Opex Concerns

Analysts raised concerns about the increasing DPD (Days Past Due) and opex ratio. Management clarified that DPD volatility in less than 90 days is expected but that the overall asset quality remains range-bound and within control. The higher opex was attributed to lower disbursements, increased employee costs for expanding distribution, and commissions to fintech partners. Management expects opex to normalize as AUM grows and efficiencies improve, without impacting ROA, which is targeted at 2.75-3%.

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