Mas Financial Services Ltd IPO....... Should you apply????

Hello Friends,

This is the second IPO of October and so far all the IPOs are having an awesome run at the markets. This actually reminds me of the situations in 2004 to 2007 when IPOs were riding on a power horse. However many IPOs that came out then lost huge market value and today are trading in pennys. As I see today those situations are surfacing. However let’s hope that the tides have changed and investors make good money in the IPOs to come.

The IPO we are talking about today is Mas Financial Services Ltd. Lets first look at the basics.

Particulars	Details
Company Name	Mas Financial Services Ltd
Issue Open Date	6th Oct 2017
Issue Closing Date	10th Oct 2017
Issue Price Band	Rs 456 to Rs 459
Issue Size	Rs 460.04 Crs
Shares per Lot	32 Shares

About the company!!!

The company is a Gujarat based NBFC which operated predominantly in 6 states including NCT of Delhi. Our business and financing products are primarily focused on middle and low income customer segments, and include five principal categories:

(i)                  micro-enterprise loans;

(ii)                 SME loans

(iii)               two-wheeler loans

(iv)              Commercial Vehicle loans (which include new and used commercial vehicle loans, used car loans and tractor loans)

(v)                housing loans.

Now that you know the company. Should you invest in Mas Financial Services Ltd?

Promoters!!!

The company is a family run business promoted by

1. Kamlesh Chimanlal Gandhi

2. Mukesh Chimanlal Gandhi

3. Shweta Kamlesh Gandhi and

4. Prarthna Marketing Private Limited.

Come let’s dive into this company to look at the fruits it might hold.

Utilization of Funds!!!

The issue is partly an OFS and partly a fresh issue.

1.       OFS of Rs 227.04 Crs which will go to the promoters and will not be received by the company.

2.       Fresh issue of Rs 233.00 Crs which will be utilized for one thing only and that’s to increase its capital adequacy ratio. Being an NBFC capital adequacy is very important.

So into the Financials now!!!!

1.       The company has increased its networth from Rs 104.83 Crs as on 31.03.2013 to Rs 383.60 Crs as on 30.06.2017.

2.       Being a NBFC the company will naturally have more debts. However its not more than twice the networth. Which is good.

3.       Very less funds of the company are into fixed assets and investments. It would be good if the company has more investments however nothing to complain there.

4.       The company’s total revenue was at Rs 341.52 Crs in the year 2016-17 and Rs 97.82 Crs in Q1 of 2017-18.

5.       Now looking into the profit of the company, its increased from Rs 26.84 Crs in 2012-13 to Rs 67.42 Crs in 2016-17. Even in the 3 months of Q1 2017-18 the company has made a profit of Rs 23.04 Crs which if we annualize will be around Rs 92.16 Crs. Which is quite good.

Valuations!!!

The company has been very consistent in improving its business and in increasing its profits year on year. The company’s EPS for 2017-18 is Basic Rs 15.86 and Diluted Rs 15.08, which takes the PE at Rs 459 to 29 times on basic. If we consider the annualized EPS of FY 2017-18 the PE would come to 22.76 which is not bad. Further there are many finance companies already listed and most of them are having a PE beyond 29. Therefore we can say that this company is priced well.

So the verdict on this case!!!

Mas Financial Services Ltd looks very promising and is a “Subscribe”.

Thank you very much for joining us.

-RicherInvestor

Written by Roger Vins Herman (CA, Mcom)

Disclosures:

The author or any person at RicherInvestor doesn't have any financial interest in the Company.