MAS Financial: INR 1 Lakh Cr AUM Target by 2036; Eyes 25% Annual Growth

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AuthorSimar Singh|Published at:
MAS Financial: INR 1 Lakh Cr AUM Target by 2036; Eyes 25% Annual Growth
Overview

MAS Financial Services has laid out an ambitious 'Vision 2036' strategy, targeting INR 1 lakh crore in Assets Under Management (AUM) by 2036, a nearly seven-fold increase from current levels. The non-banking financial company (NBFC) plans to achieve this through a 20-25% annual AUM growth, driven by a strategic pivot towards direct sourcing, which now accounts for 65% of its business. The company also aims for improved profitability metrics, including an ROA of 2.75-3.00% and ROE of 15-17%, while keeping 20-25% of AUM off-book via co-lending and direct assignment.

MAS Financial Sets Ambitious Vision 2036: INR 1 Lakh Crore AUM Target, Focus on Direct Sourcing

MAS Financial Services aims to reach INR 1,00,000 crores in Assets Under Management (AUM) by 2036, projecting a 20-25% annual growth rate.
The NBFC is strategically shifting towards a direct distribution model, now comprising 65% of its sourcing.

Reader Takeaway: Aggressive AUM growth eyed via direct sourcing; higher costs and market overleveraging pose risks.

What just happened (today’s filing)

MAS Financial Services Limited has unveiled its long-term 'Vision 2036', setting a formidable target of INR 1,00,000 crores in AUM over the next decade. This ambitious goal is underpinned by a projected annual AUM growth rate of 20% to 25%. The company highlighted that 66% of its capital growth has historically been self-funded through internal accruals.

A significant strategic pivot involves the increased adoption of a direct distribution model, which now contributes 65% of AUM sourcing, up from 50% three years ago. This is supported by a doubling of its branch network to 210 branches during the same period. Micro-enterprise loans (MEL) remain the core product, constituting over half of the balance sheet business.

Why this matters

This strategic blueprint signals a clear intent for aggressive expansion and a shift in operational focus. The move towards direct sourcing, while increasing operating expenses due to branch network expansion, is aimed at achieving long-term stability and customer 'stickiness'. The company has also set clear profitability targets, aiming for a Return on Assets (ROA) of 2.75% to 3.00% and a Return on Equity (ROE) of 15% to 17% over the Vision 2036 period.

Furthermore, MAS Financial plans to maintain capital efficiency by keeping 20% to 25% of AUM off-book through direct assignment and co-lending. The company also has plans for its housing subsidiary, aiming for 30-35% growth in that vertical and a potential IPO within the next five years.

The backstory (grounded)

With over 30 years of experience in financial services, MAS Financial has demonstrated a self-propelling business model, funding a substantial 66% of its capital growth through internal accruals. The strategic shift towards direct sourcing has been gradually implemented over the past three years, moving away from a partnership-heavy model. This evolution is reflected in the expansion of its branch network to serve a wider customer base directly.

What changes now

  • Accelerated Growth: Shareholders can expect a concerted push towards achieving the 20-25% annual AUM growth target, aiming for INR 1 lakh crore by FY2036.
  • Operational Shift: The company is strengthening its direct distribution channels, aiming to further reduce reliance on external partners for sourcing.
  • Cost Structure Evolution: Increased investments in branch expansion and direct sourcing are expected to impact operating expenses in the short to medium term.
  • Core Product Dominance: Micro-enterprise loans will continue to be the primary driver of the balance sheet.
  • Future IPO: The housing subsidiary is earmarked for potential public listing within five years, offering a pathway for unlocking value.
  • Capital Management: Plans include 2-3 capital raises over the next decade to maintain a robust capital adequacy ratio.

Risks to watch

Management has explicitly acknowledged potential headwinds, including 'overleveraging' among small borrowers as a current market challenge. Historical 'regulatory overhangs' were also cited as factors that have impacted performance in past cycles. While the company currently maintains a positive Asset Liability Management (ALM), it is closely monitoring 1-year buckets to prevent potential negative mismatches.

Peer comparison

MAS Financial's ambition places it alongside other growth-oriented NBFCs. While Bajaj Finance operates at a much larger scale with a strong digital-first approach and rapid growth, MAS Financial's focus on MSME and housing finance aligns it with segments where Cholamandalam Investment and Finance Company also has a significant presence. AAVAS Financiers shares a commonality in the housing finance segment, particularly targeting the affordable housing market.

Context metrics (time-bound)

  • The company targets INR 1,00,000 crores in AUM by FY2036.
  • Annual AUM growth is projected at 20% to 25% through FY2036.
  • Target ROA is set between 2.75% and 3.00% for the FY2026–FY2036 period.
  • Target ROE is aimed at 15% to 17% for the FY2026–FY2036 period.
  • Direct sourcing currently accounts for 65% of AUM sourcing.
  • The branch network stands at 210 branches as of the current reporting period.
  • Micro-enterprise loans form over 50% of the balance sheet business currently.
  • The share of off-book AUM through DA and co-lending is targeted at 20-25% by FY2036.
  • Annual technology expenditure is approximately INR 12-15 crores.
  • Capital Adequacy Ratio was 22.84% as of the latest reporting period.

What to track next


  • Execution Momentum: Monitor the company's progress in scaling direct sourcing and branch network expansion.

  • AUM Growth Trajectory: Track actual AUM growth against the ambitious 20-25% annual target.

  • Profitability Metrics: Observe ROA and ROE performance relative to stated targets.

  • Asset Quality: Keep a close watch on credit costs and the impact of market overleveraging on the loan portfolio.

  • Housing Subsidiary IPO: Follow developments and timelines for the planned IPO.

  • Capital Raising Plan: Monitor the company's capital raising activities over the next decade.

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