Bajaj Finserv - Q1FY22 First Cut - ICICI Direct

(CMP - Rs. 12591, MCap - Rs. 200376 crore)

For Bajaj Finserv, business traction remained healthy in finance & insurance segment but earnings got impacted due to elevated provisioning & claims.

Q1FY22 Earnings Summary

- Consolidated topline de-grew ~2% YoY to Rs. 13949 crore, due to muted performance in lending business and higher re-insurance in insurance business. Elevated provisioning in lending business and higher Covid claims impacted earnings which de-grew by 31% YoY to Rs. 833 crore

- Consolidated AUM witnessed YoY growth of 15% YoY to Rs. 159057 crore, with mortgages remaining the largest contributor at Rs. 40941 crore. Subsequently, NII came at Rs. 4489 crore vs Rs. 4152 crore in Q1FY21, increasing 8% YoY. Pre-provision profitability remained healthy, however, elevated loan loss provisioning at Rs. 1750 crore impacted earnings momentum which came at Rs. 1002 crore, up 4% YoY. 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)

- Gross written premium in general insurance increased by 9% YoY to Rs. 2494 crore. On the expenses side, claim ratio increased to 75.9% in Q1FY22 vs. 68.1% in Q1FY21, primarily due to pre-tax Covid claims of Rs. 283 crore in Q1FY22 vs Rs. 14 crore in Q1FY21. Therefore, combined ratio (total expenses for an insurer to premium) came at 103.4% vs 97.6% in Q1FY21. Higher claims provisioning led to lower underwriting profit came at Rs. 15 crore. Investment income remained healthy at Rs. 470 crore, up 34% YoY

- Life insurance gross written premium grew 48% YoY to Rs. 2516 crore. Within premium accretion, NBP (new business premium) increased 75% YoY to Rs. 1296 crore, led by pick up in individual premium and group business. Individual rated premium grew 49% YoY to Rs. 493 crore, while group premium increased to Rs. 739 crore vs Rs. 89 crore in Q1FY21, led by pick up in loan disbursement. Renewal premium witnessed an uptick reporting 27% YoY growth to Rs. 1220 crore. Healthy premium accretion was impacted by Covid claims (pre-tax Covid claims at Rs. 288 crore in Q1FY22 vs Rs. 1 crore in Q1FY21) resulting in shareholders profit of Rs. 84 crore vs Rs. 130 crore in Q1FY21. AUM grew 27% YoY to Rs. 77270 crore.

- Bajaj Finserv board has approved investment of Rs 342 crore in Bajaj Finserv Direct Limited, wholly owned subsidiary, engaged in business of distribution of financial products through digital marketplace. Of Rs 342 crore envisaged, Rs 284 crore is to be invested by Bajaj Finance Ltd. Post investment, Bajaj Finserv will continue to hold 80.1% stake in Bajaj Finserv Direct Limited, while 19.9% stake will be held by Bajaj Finance

We would be shortly coming out with a detailed report.

Shares of BAJAJ FINSERV LTD. was last trading in BSE at Rs. 12740 as compared to the previous close of Rs. 12712.3. The total number of shares traded during the day was 9182 in over 1879 trades.

The stock hit an intraday high of Rs. 12741.7 and intraday low of 12532.8. The net turnover during the day was Rs. 116032115.

Source : Equity Bulls

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