Bajaj Finserv - Q1FY21 First Cut - ICICI Securities

(CMP - Rs. 6381, MCap - Rs. 101551 crore)

Bajaj Finserv reported steady traction in lending business. Premium accretion in insurance business remained slower offset by strong investment gains, thereby supporting consolidated revenues. Higher top-line coupled with lower claims & cost control led earnings, above our estimate.

Q1FY21 Earnings Summary

- Consolidated top-line came at 15.6% YoY to Rs. 14192 crore, primarily led by healthy performance in lending business and strong investment income in insurance business. Bajaj Finance, lending arm, made a contingent provision of Rs. 1450 crore amid Covid-19, though lower opex in lending business and decline in claims led to 13.8% YoY increase in consolidated PBT to Rs. 2568 crore. Resultantly, consolidated PAT came at Rs. 1215 crore, up 43.7% YoY

- Amid lockdown and risk aversion, AUM growth remained lower at 7% YoY to Rs. 138055 crore. Subsequently, NII growth came at 13% YoY to Rs. 4152 crore. Covid 19 posed risk led to continued build up of contingent provisions of Rs. 1450 crore. Lower opex at Rs. 1152 crore, down 10% YoY, led to operating profit grow at 25% YoY to Rs. 2993 crore. PAT came at Rs. 962 crore, down 20% YoY. Amid moratorium, slippages remained lower at Rs. 140 crore, thereby leading to improvement in asset quality with GNPA at 1.4% vs 1.6% QoQ

- Gross premium accretion in general insurance declined 19.5% YoY to Rs. 2289 crore, primarily led by lockdown and lower crop insurance business during the quarter. Gross written premium, excluding crop insurance, declined ~16.6% YoY to Rs. 2271 crore. On the expenses side, claim ratio came lower at 68.1% vs. 72.8% in Q1FY20, largely due to lower health and motor OD claims, partially offset by higher property insurance amid Amphan and Nisarga. Accordingly, combined ratio improved to 97.6% in Q1FY21 compared to 103.1% in Q1FY20. Thus, underwriting profit jumped to Rs. 175 crore. Investment income remained healthy at Rs. 352 crore, attributable to recovery in equities and decline in yields. Subsequently, earnings came higher at 88% YoY to Rs. 395 crore

- Life insurance premium growth declined 7% YoY to Rs. 1700 crore. Within premium accretion, NBP (new business premium) growth declined 27% YoY to 742 crore, led by lock down in the quarter. While rated individual remained flat, group premium took a hit with premium at Rs. 89 crore vs Rs. 399 crore in Q1FY21 (attributable to lower credit disbursement by banks and NBFC). Renewal premium increased 16% YoY to Rs. 958 crore. PAT came higher at Rs. 130 crore; up ~2x YoY, as base year was impacted by investment impairment of Rs. 126 crore. Led by recovery in equities and debt investment, AUM revived sequentially and 5% on YoY basis to Rs. 60968 crore

We would be shortly coming out with a detailed report.

Shares of BAJAJ FINSERV LTD. was last trading in BSE at Rs.6381.4 as compared to the previous close of Rs. 6618.55. The total number of shares traded during the day was 94650 in over 14830 trades.

The stock hit an intraday high of Rs. 6709.3 and intraday low of 6343.6. The net turnover during the day was Rs. 616711959.

Source : Equity Bulls

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