Oct 10, 2017 - Particulars(Rs. Cr). FY13. FY14 ... Fresh Issue: Rs.233.00. Cr. OFS: Rs.227.04 Cr. Minimum bid (lot size)
MAS Financial Services Limited IPO Industry Finance-General
Price (Rs) 456-459
Subscription Dates
6th Oct-10th Oct, 2017
Price Band
Rs.456-Rs.459
Issue Type Issue Size
Book Built Issue IPO Fresh Issue: Rs.233.00 Cr OFS: Rs.227.04 Cr 32 shares
Minimum bid (lot size) Face Value Retail Allocation QIB Non-Institutional Listing On
Recommendation Neutral MAS Financial Services Limited is a Gujarat based Non-Banking Financial Company (NBFC). The company was incorporated in 1995. The company operates across six states, has 119 branches, 530,000 active loan accounts and 3,200 customers. The company offers products and services across five categories:
Rs.10 35% 50% 15% BSE, NSE
Promoters Kamlesh Chimanlal Gandhi Mukesh Chimanlal Gandhi Shweta Kamlesh Gandhi Book running managers Motilal Oswal Investment Advisors
Micro-Enterprise loans SME loans Two-wheeler loans Commercial Vehicle loans Housing loans
Investment Rationale Double digit revenue and profit growth. Over 20% ROE and NPA less than 1% Diversified portfolio of loans. Access to various sources of capital without over-leverage. Robust credit assessment and risk management framework.
Financial Summary Particulars(Rs. Cr) Total Assets Total Revenue Profit after Tax Profit Margins
FY13 FY14 7,715.68 10,776.32 1,388.47 1,776.78 268.39 316.76 19.33% 17.83%
FY15 14,877.85 2,265.28 388.20 17.14%
FY16 FY17 18,126.51 20,244.79 2,887.04 3,415.17 500.08 674.17 17.32% 19.74%
Outlook Our overall view on MAS Financial Services Limited is Neutral. The company has priced its stock moderately with a PE of 28.4 X and four times its book value. However, Micro-finance and SME finance is a highly competitive and high risk business. We would advise only clients with high riskappetite and long term investment horizon to subscribe to this IPO.
IPO Overview The company plans to raise Rs.233 crores by issuing new shares and Rs.227.04 crores through offer for sale. The funds will be used towards increasing its capital base to meet future capital requirements. The company’s investors are Deutsche Investitions- Und Entwicklungsgesellschaft GmbH (DEG), Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. (FMO), and Sarva Capital (earlier known as Lok Capital II LLC). All of them will participate in the IPO. DEG plans to sell shares worth Rs.112.6 crores while FMO and Sarva Capital plan to sell shares worth Rs.79.3 crores and Rs.35 crores, respectively. DEG and FMO will completely exit the company through the IPO. The company also sold 3,990,422 shares or 8.05% through a pre-IPO placement to Motilal Oswal Investment advisors at the rate of Rs.338.31 per share, aggregating to Rs.135 crores. These shares will be held through India Business Excellence Fund – III.
Industry Overview A non-banking financial company (“NBFC”) is a company registered under the Companies Act, 1956, and is engaged in business of loans and advances; acquisition of shares/stock/bonds/debentures/securities issued by government or local authority or other securities of marketable nature; leasing; hire-purchase; insurance business; and chit business. NBFCs have played a major role in meeting financing needs of small businessmen, thus complementing banks and other financial institutions. NBFCs help fill gaps in the availability of financial services with respect to products as well as customer and geographic segments. A strong linkage at the grassroots level makes them a critical cog in the financial system. They cater to the masses in rural and semi-urban areas. They mainly cater to those who have limited access to formal financing channels and lend to the informal sector and to people without credit histories. By virtue of access to low-cost funds and an extensive branch network, banks compete with NBFCs, especially on the cost front. However, with their strategic presence in lending segments ATS Wealth Managers Pvt Ltd.
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as well as geographies, NBFCs have carved out a niche for themselves to effectively compete with banks. The niche product focus of NBFCs enables them to make customized offerings.
Peer Review Company
EPS (Rs) Basic Diluted
Face Value (Rs)
MAS Financial Services Limited Shriram City Union Finance Limited Capital First Limited Mahindra & Mahindra Financial Services Limited Bajaj Finance Limited
NAV P/E (Rs) 8.12 34.58 NA
P/BV
RoNW (%) 27.95
10
8.12
NA
10
83.75
83.64
705.14
22.8
2.7
11.88
10 2
17.22 13.69
16.36 13.58
181.9 111.76
40.83 21.44
3.67 2.61
9.45 12.15
2
48.46
47.77
277.46
23.18
3.99
17.22
Vivek Anavatti, MBA Equity Research Analyst Ph: +91-7899809414 Email:
[email protected] Disclaimer: This report is only for the information of our customers. Recommendations, opinions or suggestions are given with the understanding that readers acting on this information assume all risks involved. The information provided herein is not to be construed as an offer to buy or sell securities of any kind. ATS and/or its group companies do not as assume any responsibility or liability resulting from the use of such information.
ATS Wealth Managers Pvt Ltd.
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