Can MAS Financial Sustain Its Outperformance on Strong Growth Momentum?

Why It Matters

Sustained high‑growth financing for MSMEs strengthens India’s credit ecosystem and offers investors a compelling exposure to a rapidly scaling, yet prudently managed, financial services player.

Key Takeaways

• MFSL aims ₹1,00,000 crore AUM by 2036
• Double‑digit YoY growth in AUM, revenue, profit
• Asset quality ratio rose to 2.6% in Dec quarter
• Branch network concentrated: 88% in four western states
• Cost of funds expected to drop to 9‑9.25%

Pulse Analysis

MAS Financial Services is riding a robust growth wave, with its AUM expanding 22.5% year‑on‑year to ₹859.2 crore in the December quarter. This momentum reflects strong demand in its core micro‑ and SME loan segments, which together represent roughly 75% of its standalone loan book. The firm’s ambition to reach ₹1 lakh crore in assets by 2036 hinges on maintaining 30‑35% annual AUM growth, a target that aligns with India’s broader financial inclusion agenda and the rising credit appetite among underserved enterprises.

A critical component of MFSL’s strategy is disciplined asset‑quality management. While the gross non‑performing assets ratio has edged up to 2.6%—the highest in a decade—the company’s cautious loan‑origination stance aims to mitigate further deterioration. By focusing on high‑yield, low‑risk segments such as micro‑enterprises and salaried personal loans, MFSL seeks to preserve its RoA, which already sits at 2.9%, above the medium‑term guidance of 2.75‑3%. This prudent approach is especially pertinent as the sector grapples with rising GNPA trends across the market.

The firm’s distribution footprint—208 branches concentrated in Gujarat, Rajasthan, Madhya Pradesh and Maharashtra—covers 88% of its network, providing deep regional penetration. Complementing its branch base, MFSL has forged partnerships with 215 business entities, a catalyst that could accelerate loan book expansion without proportionate capital outlay. Moreover, a projected decline in cost of funds to the 9‑9.25% range enhances net interest margins, reinforcing the valuation case. Analysts’ upgraded price targets and sustained buy recommendations underscore the market’s confidence in MFSL’s growth trajectory and risk‑adjusted returns.

Can MAS Financial sustain its outperformance on strong growth momentum?

By Ranjit Shinde, ET Bureau · Last Updated: Feb 20 2026, 05:55 AM IST

ET Intelligence Group: MAS Financial Services (MFSL), a mid‑tier micro, small and medium enterprises (MSME) financier, has gained 9 % over the past month, outperforming the 2 % rise in the BSE Financial Services index. The company reported double‑digit growth in disbursement and an improving margin profile. It plans to reach ₹1,00,000 crore in consolidated assets under management (AUM) by 2036, up from ₹14,641 crore at the end of December 2025, driven by loan segments that include MSME, vehicles and housing. Analysts have retained a ‘buy’ rating on the stock and have raised the target price by 7‑9 % citing attractive valuation amid improving return ratios and double‑digit AUM growth.

The company posted double‑digit year‑on‑year growth in AUM, revenue and net profit for the December 2025 quarter as well as for the first nine months of the current fiscal year (FY 26). While this was encouraging, investors were attracted by management’s intention to approach the demand revival in the loan market cautiously, with a focus on asset quality. This signals that the firm will avoid high‑risk bets while pursuing its targeted loan growth over the next decade, which will require an annual AUM growth of 30‑35 %. The caution is important given the rising trend in gross non‑performing assets (GNPA). The asset‑quality ratio has risen in each of the last 10 quarters, reaching 2.6 % in the December quarter (up from 2.1 % in June 2023).

MFSL operates across India through 208 branches. The top four states—Gujarat, Rajasthan, Madhya Pradesh and Maharashtra—host nearly 88 % of the branches. On a standalone basis, the company has five loan segments: micro‑enterprises, SME, 2‑wheelers, commercial vehicles and salaried personal loans. Micro and SME segments together account for roughly three‑quarters of the standalone loan book of ₹13,782.3 crore. The firm also has a rural‑housing‑finance subsidiary. Its AUM increased by 22.5 % year‑on‑year to ₹859.2 crore, representing about 6 % of the consolidated AUM in the December quarter.

Apart from its own branches, MFSL has tied up with 215 business partners. The company views these partnerships as a major catalyst for accelerating the loan book over the next decade. Management has guided for 20‑25 % AUM growth and a return on assets (RoA) of 2.75‑3 % in the medium‑to‑long term. In the December quarter, it recorded an RoA of 2.9 %.

“The company is expected to benefit from continued downward repricing of borrowings with incremental cost of funds (CoF) ranging between 9‑9.25 % versus 9.5 % for the December quarter,” noted Axis Securities. The brokerage expects another 10 basis‑point reduction in CoF for the March quarter and believes the current valuation offers scope for a meaningful re‑rating on the back of steady performance. Axis Securities has raised its stock‑price target by nearly 7 % to ₹405.