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00:00Hello and welcome, you are watching the Small and Mid-Cap show. I am Mahima Vacharajanian

00:23with me is Harsh Saita.

00:25You know, good having Mr. Kamlesh Gandhi who is the Chairman Managing Director at Mass

00:30Financial Services. Welcome, sir. Always good having you and understanding perspective.

00:37Mr. Gandhi, just talk to us first off about growth. 23 odd percent in Q1 FY25. Is it holding

00:45up? Are there certain segments, sectors which are growing better than others? Of course,

00:51you also got the benefit of two months post the Q1 numbers. How are trends playing out?

00:57Sir, good morning. Very rightly remarked by you that you have been a very consistent performer

01:04over more than two decades now. And we have always shared that we would like to grow anywhere

01:11between 20 to 25%. And I'm very happy to share with you that we have maintained that trajectory

01:17not over last few quarters, but at least over a decade now. Coming back to your point

01:23on how we see growth, I think Q2 we are also witnessing strong numbers in lines with our

01:30anticipated stated objective, that is to grow anywhere between 20 to 25%. And we are very

01:37confident of achieving that growth of anywhere between 20 to 25%.

01:43Right. Mr. Gandhi, Mahima also joining in. You know, I want to understand that you aim to double

01:49your AUM every three to four years. So I want to understand what are the kind of strategies and

01:53initiatives that you'll be taking to see this kind of growth?

01:59Sir, we are putting our endeavours to be a diversified asset company. Having said that,

02:05currently 80% of our book comes from MSME, but we also have commercial vehicle, two wheeler and

02:11less than 10% of personal loans. So we are trying to say to that, that how we can be a diversified

02:17asset company. And your next phase of growth, as you know, that we reached 10,000 crores last in

02:2324 March. And as we embark on our next phase of growth from 10 to 20,000 crores within next three

02:29to four years, we would like to be well diversified among all the products, withwithstanding the fact

02:35that MSME will be the major contributor to the overall asset growth.

02:40All right, so you lean on MSME. I get that. Also, I want to try and understand, so you've spoken to us

02:46about product, talk to us about geography as well. You're well diversified, but there are certain

02:52states, pockets, geographies where you have lower presence. Are you penetrating deeper? Is that the

03:00goal? Or you want to widen your reach within the places that you are at and not go deeper, just be

03:06where you are and just try and optimize? What's the strategy there?

03:11So if you see, currently we are presenting the nine states, including Delhi and Sierra. And the

03:17idea is to capitalize on all these nine states and we'll try to have the demographic understanding of

03:24all the places where we are working and would like to penetrate deep in each of the states. And as we

03:29see it now, these nine states will be sufficient for our next leg of growth. And we would like to

03:33replicate the Gujarat model where we have penetrated very deep. And we take our own time.

03:39Whenever we enter a new state, we take our own time to understand the demography, have the right

03:46set of people, have the right understanding of the products and then grow. So I think we have spent

03:53sufficient time in South now and we'll be growing there within the next three to four years. And we'll

03:58be penetrating in all the states which we are present right now in the way we have done it in

04:04Gujarat.

04:06All right, Mr. Gandhi, you know, you've reported a strong ROI of 2.8%. But I want to understand

04:11what's happening on the margin side. Going forward also, I want to understand what are your

04:15expectations with respect to margins?

04:19So historically, we have been a company maintaining means anywhere between 6.75 to 7.25%,

04:24depending upon the macro situation from time to time. So we see no reason that we would not be in a

04:30position to maintain this name anywhere between 6.75 to 7.25%. And that will be sufficient to have a

04:36range bond ROAs of anywhere between 2.75 to 3%. So going forward, we are quite optimistic and

04:43confident that we'll be in a position to maintain our ROAs anywhere between 2.75 to 3%.

04:49Understood. So, ROA understood, but what happens with regard to margins? If at all rates were to

04:58come off? Would the margin increase be temporary? How much of it gets passed on to the consumer?

05:06Just talk us through what happens in case of rate cuts.

05:10See, according to our strategic intent, you know, across cycles, whenever the rates have increased

05:16or decreased, as I shared with you that the means will remain range bond anywhere between 6.75 to 7.25%.

05:24Assuming that we are getting a cost of benefit in the cost of funds by 0.25%, the means will settle at

05:30the higher end of the spectrum, which I discussed with you that it is at 7.25%. And in the times when

05:36the rates were higher, we were at the lower end of the spectrum at around 6.8 to 7%. So with the increase

05:44of the decrease in rate, the range bond names will play out anywhere between 6.75 to 7.25%.

05:52Okay. And just to try and understand, right, the crux of the stability that the mass financial, you

06:03know, kind of brand brings is the asset quality. It kind of helps you grow at the 20 to 25% or gives you

06:11confidence to grow at 20 to 25%. So I want to try and focus in on that asset quality in terms of your net

06:19and gross stage three pre COVID was slightly lower. When you're looking at the graph, it's shifted

06:26upwards post COVID, not materially, but it's shifted upwards. Where can we expect that? What's the

06:35reason for that? And do you believe that now stability will be there in terms of, in terms of

06:40ratios?

06:43So the consistent growth of 20 to 25% is the cause and the effect that the very fact that we have been

06:51in a position to maintain the quality is the approach to asset creation of growing at a very

06:55steady pace and not getting overexcited by the opportunities that the market's present. Now

07:00coming to the GNP and NNPA ratios, we see this GNP ratios to be range bond anywhere between 2.25% to

07:072.5%, depending upon the product mix that results into the various diversified products. And also

07:16the NNPA will be anywhere between 1.5 to 2%. So this will be our stated objective going forward.

07:24Okay, Mr. Gandhi, you know, I want to understand that you'd raised 500 crores roughly via QIP in

07:29quarter one. So I want to understand that where are you going to put to use that kind of money that

07:35you've raised, you know, whether it is geographical expansion, or what is it going to be like?

07:41So in lending business, capital is the lifeblood. And we have raised this money up front for our

07:49next phase of growth. If I share with you when we raised 500 crores, we were very well capitalized

07:54at 24% to have one capital. But as we know that, if you if you want to choose and pick the investors

08:00also, it requires a handful of time. So we are much way ahead of our time of the requirement as

08:06far as the capital is concerned. And this capital will be good enough for us for next three to four

08:11years, to be precise, till at least 20,000 crores. So that will strengthen the capital base.

08:19Got it. Yeah, so it kind of gives you leverage with regard to capital. And does it also, therefore

08:28bump up your NIMS a little bit, just the fact that you've done equity and not debt?

08:35There will be a slight improvement on NIMS because of that, because 500 crores adding up, which is

08:43capital coming at zero cost. So that will add up slightly to the NIMS and overall profitability.

08:49I want to talk to you about risk in SME especially. What gives you that kind of comfort?

08:57You know, of course, it's your track record as well. But what are you doing differently

09:01that gets you the kind of results in terms of asset quality in SME that it does?

09:07So to be very candid, we don't do anything differently. But the only thing is that we

09:14follow a very, very simple concept of extending credit where it is due over all these years.

09:19My experience of 28 years tells that either lending can be a very simple business or you

09:24can make it as complicated as you want to make it. So if you stick to the dictum of

09:29extending credit where it is due, discovering growth at the marketplace rather than just

09:34determining growth, these are a few of the strategies which has helped us to maintain

09:38the asset quality and at the same time grow at a very steady pace.

09:42You've also grown two other segments of yours. When I'm looking at it, over the last year,

09:51you've doubled down on CV loans and you've done salaried personal loans. So your

10:00salary personal loans. So you're also getting into, in a sense, you're getting into pockets

10:08and segments which you haven't done earlier. Is that possibly going to increase credit

10:14cost and where is your credit cost guidance target? Is there something in your mind, sir?

10:20Just to share with you, we are one of the oldest commercial vehicle financers.

10:25When the balance sheet size was small, we used to deal in three wheelers and light commercial

10:30vehicles. So once we found the risk adjusted returns dynamics favorable, we are refocusing

10:37on commercial vehicle financing. So commercial vehicle financing is nothing new to us and so is

10:42PL. So we were doing PL on a very small scale, but to be also present on the consumer side of

10:48the economy. But within the range of not more than 10% of our AUM, we have a strategy for

10:55distributing PL loans also. So about this segment, we are well versed with the segments. We are well

11:00aware of about the dynamics of this segment. And when I talk about a GNP arrangement between 2.25

11:07to 2.5% and an NPA between 1.5 to 2%, it factors all the products.

11:13All right. Well, Mr. Gandhi, thank you so much for giving us those insights on mass

11:17financial and thank you so much for taking your time and speaking with us at NDTV Profit.

11:22Thank you. My pleasure.

Mas Financial: Use Of Proceeds From ₹500 Crore Fundraise | NDTV Profit

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