Bajaj Finance - Q2FY21 First Cut - ICICI Securities

(CMP- Rs. 3260; MCap - Rs. 196414 crore)

Bajaj Finance reported in line performance with elevated Covid provisions, lower opex enabled higher-than-expected operating profit and standstill status kept asset quality stable.

Q2FY21 Earnings Summary

- The consolidated AUM witnessed growth of 1% YoY to Rs. 137300 crore, declining 1% sequentially. AUM for Mortgage segment increased by 15% YoY from highs of 30-40% range in past and was flat QoQ to Rs. 45989 crore as of 30 Sep 2020. Consumer B2B declined 6%QoQ and 19 %YoY to Rs. 20605 crore. Consumer B2C de-grew 3% QoQ but remained just up 5% YoY to Rs. 28262 crore and forms 21% of loan book

- NII growth came at 4% YoY to Rs. 4158 crore in line with estimates. Lower opex continued at Rs. 1159 crore (down 16 % YoY and flat QoQ) with contained employee and other expenses. operating profit growth of 14% YoY to Rs. 3005 crore was above estimates due to tight cost control. Opex to income ratio maintained at 27.8% QoQ. Overall provisions at Rs. 1700 crore were largely as guided. Profit after tax for Q2FY21 thereby came at Rs. 965 crore down 36% YoY and flat QoQ

- BAF contingency provision for COVID-19 of Rs. 1,370 crore led to the overall provision buffer rising to Rs. 5099 crore vs Rs. 3729 crore as on June 2020. The contingency provision and overall stage1&2 for COVID-19 remain substantially high

- Headline asset quality improved in percentage terms, as slippages were lower on standstill status due to moratorium. GNPA ratio was at 1.03 % from 1.4% QoQ and NNPA ratio was 0.37%from 0.4% on consolidated basis. NPA provision coverage ratio was 64% from 65% QoQ. Overall standard assets provisioning (ECL stage 1 and 2) grew to 3.69% from 2.73% QoQ led by Covid provisions build-up

- Customer franchise as of Q2FY21 rose to 4.4 crore from 4.3 crore QoQ. New loans booked declined substantially and was same QoQ at 1.7 million

- Capital adequacy remained strong at 26.6% with Tier I at 23.01%

- Moratorium update or expected asset restructuring details are awaited

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.3233.25 as compared to the previous close of Rs. 3262.1. The total number of shares traded during the day was 237773 in over 21519 trades.

The stock hit an intraday high of Rs. 3295 and intraday low of 3101.6. The net turnover during the day was Rs. 763032000.

Source : Equity Bulls

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