MAS Financial Services Limited: Navigating Growth with Prudence in Q3 FY26

MAS Financial Services Limited, a prominent player in MSME financing, has once again demonstrated a robust financial performance for the third quarter of Fiscal Year 2026. The company reported a consolidated Assets Under Management (AUM) of INR14,641 crore, marking an impressive 18.28% year-on-year growth. Profit After Tax (PAT) also saw a significant increase of 20.55% year-on-year, excluding a one-time impact from new Labour Code provisions. These figures underscore the company's consistent growth trajectory and its ability to adapt to evolving market dynamics, a testament to its three decades of operational excellence.

Kamlesh Gandhi, the Chairman and Managing Director, highlighted the improving demand at the ground level, expressing cautious optimism about returning to a 20-25% AUM growth trajectory within the next couple of quarters. The company's strategic focus on risk and profitability continues to be a guiding principle, ensuring sustainable growth. The housing finance subsidiary, MAS Rural Housing & Mortgage Finance Limited, also contributed significantly, growing its AUM by 22.49% to INR859 crore, with PAT increasing by 44.81%. The management aims for this segment to achieve 30-35% growth within the next one to two quarters.

Strategic Product Mix and Geographical Expansion

MAS Financial's diversified product portfolio remains a key strength. Micro Enterprise Loans (MEL) and SME loans continue to be core growth drivers. The two-wheeler segment experienced strong growth, benefiting from a well-developed tech stack and the festive season. While the Commercial Vehicle (CV) segment saw muted growth due to a conscious decision to re-evaluate underwriting models and address early signs of stress, management anticipates a normalization of growth in this segment within the next two quarters. Salaried Personal Loans (SPL) are also expected to maintain a healthy growth rate of 25-30%.

Geographical expansion is another critical component of the company's growth strategy. MAS Financial operates across 13 states and union territories, with a strong presence in Gujarat, Maharashtra, Madhya Pradesh, Chhattisgarh, Rajasthan, and the NCR region, as well as Southern states like Tamil Nadu, Karnataka, Andhra Pradesh, and Telangana. The company plans to expand further into North India, particularly Uttar Pradesh, by opening 5-6 new branches in the next financial year. This expansion, coupled with deepening its network in existing Southern markets, is expected to contribute significantly to future growth.

Financial Highlights and Asset Quality

The company's financial health is robust, characterized by strong capitalization and healthy asset quality. The consolidated net Stage 3 assets stood at 1.72%, with a buffer provisioning of 0.16%, reflecting proactive risk management. The capital adequacy ratio remains strong at 22.84%, with Tier-I capital at 21.48%, well above regulatory norms. This strong capital base provides ample room for future growth and liability management. The company also maintains significant liquidity, with approximately INR1,000 crore in cash and cash equivalents and unutilized credit limits of INR200 crore.

MAS Financial's approach to liability management is equally disciplined. The company has tied up liquidity for the entire fiscal year 2026-27 and is focused on reducing its cost of borrowing to enhance profitability. Direct assignment and co-lending transactions continue to be a strategic focus, aiming to maintain 20-25% of AUM as off-book, ensuring matching maturities and without recourse to the company. The company also continues to carry a management overlay of INR17.60 crore, or 0.16% of its on-book assets, further strengthening its asset quality.

*Excluding one-time impact of New Labour Code provision of INR4.24 crore.

Technology Integration and Future Outlook

Technology integration is a core pillar of MAS Financial's strategy. The company is actively integrating over 50 APIs across all operational verticals, from origination to disbursement and collection. This includes BRE-enabled origination, EKYC, bureau checks, income analysis, and cashless transactions. These initiatives are aimed at significant TAT (Turnaround Time) reduction, improved operational efficiency, and better credit assessment through authenticated data sourcing. The company is also piloting embedded finance products to increase the average ticket size for MEL, demonstrating its commitment to innovation and leveraging technology for growth.

MAS Financial's commitment to its mission of "Excellence through endeavors" is evident in its consistent performance and strategic initiatives. The management's focus on strengthening distribution, improving efficiencies through technology, and maintaining prudent growth positions the company for continued success. The board has also declared an interim dividend of INR1.25 per share, aligning with its policy of rewarding shareholders. The company remains confident in achieving consistent and prudent growth between 20% to 25% in the medium to long term, reinforcing investor trust and its leadership position in the MSME financing sector.