Bajaj Finance - Q1FY21 First Cut - ICICI Securities

(CMP- Rs. 3470; MCap - Rs. 209097 crore

Bajaj Finance reported in line performance with Covid provisions remaining elevated, significantly lower opex enabled operating profit higher than expectation.

Q1FY21 Earnings Summary

- Consolidated moratorium book has reduced to Rs. 21,705 crore (or 15.7% of AUM) from Rs. 38,599 crore (or 27% of AUM) as of 30 April 2020 owing to reduction in bounce rate coupled with better collection efficiency. Moratorium in auto finance segment remained high at 50% form 70% from April.

- BAF contingency provision for COVID-19 of Rs. 1,450 crore led to the overall contingency provision to Rs. 2,350 crore as on June 2020. The contingency provision for COVID-19 is now at 10.8% of consolidated moratorium book. This contingency provision together with existing expected credit loss provision off 623 crore provides an overall provisioning coverage of 13.7% on the consolidated moratorium book.

- The consolidated AUM witnessed growth of 7% YoY to Rs. 138055 crore. AUM for Bajaj Housing increased by 52% YoY and 4% QoQ to Rs. 32,982 crore as of 30 June 2020. Consumer B2C and Rural B2C are depicting YoY growth but declined sequentially. Consumer B2B and Rural B2B segments de-grew 12% YoY each.

- Hence, overall NII growth came at 13% YoY to Rs. 4152 crore marginally higher than estimated. Lower opex at Rs. 1152 crore (down 10 % YoY and 20% QoQ) led to operating profit growth of 25% YoY to Rs. 2993 crore. Profit after tax for Q1FY21 thereby came at Rs. 962 crore down 20% YoY.

- Headline asset quality improved in percentage terms, as slippages were lower QoQ at Rs. 140 crore due to moratorium. GNPA ratio was at 1.4 % from 1.6% QoQ and NNPA ratio declined 24 bps to 0.4% on consolidated basis. NPA provision coverage ratio rose to 65% from 60%QoQ. Overall standard assets provisioning (ECL stage 1 and 2) grew to 2.73% from 1.59% QoQ led by Covid provisions build-up.

- Opex to income ratio improved to 27.6% from 31.0% in Q4 FY20 due to lockdown

- Customer franchise as of Q1FY21 rose to 42.95 million from 42.6 million QoQ. New loans booked declined 76% YoY to 1.75 million

- Deposits book stood at Rs. 21,427 crore, a growth of 62% YoY. Its contribution to consolidated balance sheet was 17% as of 31 March 2020. Retail deposits contributed to ~70% to the deposits book. Capital adequacy remained strong at 26.4% with Tier I at 22.56%

We will be coming out with a detailed report post the earnings conference call.

Shares of Bajaj Finance Limited was last trading in BSE at Rs.3292.9 as compared to the previous close of Rs. 3441.35. The total number of shares traded during the day was 1037897 in over 74379 trades.

The stock hit an intraday high of Rs. 3517.75 and intraday low of 3220. The net turnover during the day was Rs. 3518543244.

Source : Equity Bulls

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