MAS Financial Eyes 20-25% AUM Growth on Improving Credit

MAS Financial Confident in Regaining Growth Momentum

MAS Financial Services is poised to return to its targeted 20-25% annual growth in Assets Under Management (AUM) within the next two quarters, according to Chairman and Managing Director Kamlesh Gandhi. The company's recent AUM growth of 18.25% reflects a deliberate and cautious lending strategy, prioritizing asset quality and profitability over aggressive expansion in a challenging macroeconomic environment. Management remains confident that as credit conditions stabilize, particularly in the MSME sector, the company will comfortably achieve its medium-term objectives.

This optimistic outlook is supported by a strong performance in the third quarter of fiscal year 2026 (Q3FY26). The Ahmedabad-based non-banking financial company (NBFC) has demonstrated resilience, navigating market headwinds while maintaining a healthy financial position and a robust capital adequacy ratio of over 24%.

Strong Q3 FY26 Financial Performance

The company reported a solid operating performance for the quarter ending December 2025. Net Interest Income (NII) saw a significant year-on-year increase of 27.7%, rising to ₹263 crore from ₹206 crore in the corresponding period of the previous year. Pre-provision operating profit also grew by 20.4% to ₹167 crore. Consequently, Profit After Tax (PAT) for the quarter stood at ₹94 crore, a 19.7% increase from ₹78 crore in Q3FY25, underscoring the company's consistent profitability.

A Calibrated Approach to Growth

Kamlesh Gandhi attributed the moderated 18.25% AUM growth to a strategic decision to tighten credit filters, especially in response to early signs of stress in certain portfolios. The company consciously calibrated its growth to protect its balance sheet. This was particularly relevant for the commercial vehicle (CV) and Micro, Small, and Medium Enterprises (MSME) loan segments, which have faced headwinds. Gandhi noted a significant overlap between these two borrower categories, suggesting that an easing of stress in the MSME space will positively impact the CV loan book.

The quarter-on-quarter AUM increase of approximately 6% in Q3 over Q2 indicates that the company is already moving steadily towards its desired growth trajectory. Management expects this momentum to build over the next one to two quarters.

Unwavering Focus on Asset Quality

MAS Financial has consistently maintained that it will not chase AUM growth at the cost of asset quality. The company aims to keep its gross stage three assets within a manageable range of 2.5% to 2.75%. Despite market challenges, it has successfully operated within this band. As of the second quarter of FY26, the company's net Stage 3 assets stood at a healthy 1.69%, supported by a management overlay of ₹17.60 crore as a prudent measure against potential risks.

This disciplined approach to risk management has been a cornerstone of the company's strategy, allowing it to navigate various economic cycles successfully over the past three decades.

Path to Improved Profitability

Looking ahead, MAS Financial is focused on achieving its medium-term Return on Assets (ROA) target of around 3%. The current ROA is just under this, at approximately 2.8%. Management sees several levers to enhance profitability. One key factor is the anticipated transmission of interest rate cuts from the Reserve Bank of India, which is expected to improve margins. Additionally, operating leverage from the company's extensive distribution network and stable asset quality are projected to contribute positively to the bottom line.

Diversified Portfolio and Segment Outlook

The company's loan book is diversified across several products. While two-wheeler loans have shown strong growth, the commercial vehicle segment has experienced some pressure, a trend observed across the NBFC sector. The salaried personal loan segment has grown rapidly, but management has capped its exposure at 10% of the total AUM to maintain risk discipline. The MSME portfolio remains the core focus, contributing substantially to the company's growth.

Strong Capitalisation and Long-Term Vision

With a market capitalisation of approximately ₹5,901.77 crore and a capital adequacy ratio of 24.72%, MAS Financial is well-capitalised to fund its future growth. The company's shares have also rewarded investors, gaining over 24% in the past year. The management has laid out an ambitious long-term vision to grow its AUM to ₹1 lakh crore within the next decade, reflecting its confidence in India's credit demand and its own robust business model.

Conclusion: Poised for Sustainable Growth

MAS Financial Services has demonstrated a balanced and prudent approach, successfully navigating recent market challenges while delivering consistent financial performance. Its strategy of prioritizing asset quality and profitability has built a resilient foundation. With improving credit conditions on the horizon and a clear roadmap for growth, the company is well-positioned to achieve its target of 20-25% AUM growth and create sustained value for its stakeholders.