Bajaj Finance - Q1FY22 First Cut - ICICI Direct

(CMP - Rs. 5980; MCap - Rs. 360900 crore)

Bajaj Finance reported lower than expected earnings as higher provisions impacted PAT as per mid quarter guidance. Asset quality showed deep cuts with GNPA ratio surging QoQ.

Q1FY22 Earnings Summary

- GNPA/NNPA ratio negatively surprised rising 117bps/76bps to 2.96% and 1.46% respectively in Q1FY22 from Q4FY21 levels of 1.79% / 0.75% (post ~Rs. 113 crore w/off in Q1)

- Loan losses and provisions for Q1 FY22 was Rs. 1750, crore as against Rs. 1,230 crore in Q4 FY21. The company was holding a management overlay and macro provision of ~Rs. 840 crore as of 31 March 2021 and its come down to Rs. 486 crore in Q1FY22. NPA provision coverage ratio stands at 51% on stage 3 assets down from 58% QoQ and it is ~174bps coverage on stage 1 & 2

- The management has mentioned in presentation that in absence of a severe third wave, the Company is committed to bring down its GNPA to 1.7-1.8% & NNPA to 0.7-0.8% by 31 March 2022

- Non overdue one-time restructuring (OTR) book stood at ₹ 1,287 crore (0.8% of book) from 1739 crore as of 31 March 2021. ECL provision stands at ₹235 crore (18.3%)

- Consolidated AUM as of 30 June 2021 was at ₹ 1,59,057 crore as against ₹ 1,38,055 crore as of 30 June 2020, up 15% YoY. Core AUM growth* in Q1 FY22 was ~₹ 4100 crore. AUM witnessed growth of 4% YoY to Rs. 152947 crore, with mortgages remaining the largest contributor

- Net Interest Income (NII) came below expectations for Q1FY22 at Rs. 4,484 crore vs Rs. 4,655 crore in Q4FY21 declining 4% QoQ. Interest reversal for the quarter was Rs. 450 crore as compared to Rs. 298 crore in Q4FY21

- C/I ratio stood at 30.6% from 34.5% QoQ. It has remained quite volatile in last few quarters as business growth varies

- Operating profit grew 4% YoY to Rs. 3116 crore, below our estimates. Profit after tax was far lower at Rs. 1002 crore, up 4% YoY and declined 25% QoQ

- Capital adequacy remained strong at 28.5% with Tier I at 25.4%

- Total customer franchise stood at 50.45 mn as of June 2021. Cross sell franchise stood at 27.43 mn, a growth of 14% YoY. It acquired 1.88mn new customers in Q1FY22 versus 2.26 mn in Q4FY21. The quarterly new customer addition was within their general guidance of 7-8 mn new customer acquisition in a year

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. 5937.9 as compared to the previous close of Rs. 6012.75. The total number of shares traded during the day was 50657 in over 7227 trades.

The stock hit an intraday high of Rs. 6028.8 and intraday low of 5868.45. The net turnover during the day was Rs. 302018233.

Source : Equity Bulls

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