MAS Financial: Non-Banking Financial Company With Strong Track Record

Gokul Raj Ponnuraj of Bavaria Industries Group presented his investment thesis on MAS Financial Services (India: MASFIN) at Asian Investing Summit 2025.

Thesis summary:

MAS Financial is an Indian NBFC (non-banking financial) with a terrific track record of compounding book value per share, lending AUM, earnings per share etc at 25%+ for the last two decades. The owner-operator has consistently focused on steady growth with minimal equity dilution and that has allowed him to continue to own >65% of the firm. The firm has a long term culture with low employee turnover and conservative lending policies (‘extend credit only where it is due’ is their core philosophy).

The firm has a highly granular retail loan portfolio that is diversified across 4 lending segments. The firm has consistently delivered post-tax ROA’s of 3%+. Even during the COVID wave 1 and 2, the firm generated 2.8% and 2.7% ROA respectively. With conservative leverage, the firm can deliver 13-14% ROE even in a weak year. On a normalized basis, the firm can sustainably deliver 2.8-3.2% ROA and 16-18% ROE with little volatility. Management expects to grow their AUM at 20-25% CAGR for the next several years.

The stock since its IPO has traded at a meaningful premium to the NBFC basket at >3X price to book value. During the ongoing SMID correction in Indian markets, the stock has started to trade at an attractive valuation of 1.6X price to book value and 14X price to earnings. This is attractive for a business with a well capitalized balance sheet (Debt/ Equity of 3.5X) and scalable operating model in a high growth industry. Gokul Raj believes the recent price provides an attractive entry point into a long term compounder.

Disclaimer: We have accumulated around 1.5% of the firm over the last few months and hence biased in our analysis. Please do your own research and we would be happy to hear any contrarian opinion to our analysis.

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About the instructor:

Gokul Raj Ponnuraj is a value investor with a focus on small and mid-cap compounders and spin-off’s with a bias towards emerging markets. He has been investing in the Indian markets since 2006 and in global markets since 2017. Gokul Raj manages the public equities portfolio at Bavaria Industries Group. The firm uses its balance sheet assets (permanent capital) to invest in opportunities with an attractive risk-reward trade off. Gokul Raj holds a Master in Finance degree from London Business School and a CFA charterholder.