Led by standstill status from supreme court, GNPA ratio declined to 0.55% from 1.03% QoQ and NNPA ratio came at 0.19% from 0.37% on consolidated basis. However, proforma GNPA and NNPA surged to 2.86% and 1.22% respectively. Restructuring is at 1.4% of loans and has provisions of Rs. 397 crore on it. The Company expects to revert to pre-Covid NNPA by 1HFY22, except auto finance business which may take longer due to underlying collateral value.
During the quarter, the Company has also done one-time principal write-off of ₹1,970 crore, on account of Covid related stress. The Company holds management overlay provision of ₹800 crore as of 31 December 2020 for Covid related stress. Consolidated AUM witnessed QoQ growth of 4% YoY to Rs. 143550 crore, declining 1% YoY. The Company expects core AUM growth to resume to pre-Covid levels by Q4FY21. Consumer B2B declined 16% YoY but improved 10% QoQ to Rs. 22893 crore.
NII declined 4% YoY to Rs. 4296 crore, in line with estimates. NII for the quarter was lower by ₹239 crore, compared to Q3FY20 led by interest reversal of ₹450 crore versus ₹ 83 crore in Q3FY20 and cost of surplus liquidity of ₹ 213 crore, against ₹ 83 crore in Q3 FY20. Operating profit declined 3% YoY to Rs. 2906 crore, in line with estimates. Overall provisions at Rs. 1351 crore were marginally lower QoQ. Profit after tax for Q3FY21 thereby came at Rs. 1146 crore, down 25% YoY and up 19% QoQ.
Valuation & Outlook
Bajaj Finance has sailed through the headwinds and emerged stronger with a leaner operating model and robust growth guidance. Growth guidance of ~25% for FY22E and opportunity to apply for banking licence have resulted in renewed interest of investors in the stock. We believe premium multiples are returning for Bajaj Finance. We maintain valuation at multiple at 7x FY23E ABV and target price at Rs. 5900. Maintain BUY recommendation on the stock.
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_BajajFinance_Q3FY21.pdf
Shares of Bajaj Finance Limited was last trading in BSE at Rs.4981.15 as compared to the previous close of Rs. 4960.85. The total number of shares traded during the day was 165005 in over 17785 trades.
The stock hit an intraday high of Rs. 5031 and intraday low of 4900. The net turnover during the day was Rs. 819873997.