Result Analysis: Bajaj Finance Limited (CMP: Rs.5756) |
Result Update: Q3FY23 |
Bajaj Finance Limited, the lending and investment arm of Bajaj Finserv group, is a non-banking finance company (NBFC) which is engaged in lending and allied activities. It focuses on consumer lending, small and medium-sized enterprises (SME) lending, commercial lending, rural lending, fixed deposits and value-added services. Its consumer lending products include two-wheelers and three-wheelers finance, consumer durables finance, digital products finance, retailer finance, salaried personal loans, e-commerce consumer finance, e-commerce seller finance and home loan. It’s SME lending products include loan against property and business loans.
Stock Details
|
Market Cap. (Cr.) |
348485 |
Equity (Cr.) |
121.09 |
Face Value |
2 |
52 Wk. high/low |
7777 / 5236 |
BSE Code |
500034 |
NSE Code |
BAJFINANCE |
Book Value (Rs) |
793.54 |
Sector |
Finance |
Key Ratios
|
ROE (%): |
17.43 |
TTM EPS: |
163.88 |
P/BV: |
7.3 |
TTM P/E: |
35.12 |
Financial Performance:
Shareholding Pattern:
Result Highlights:
-
- Bajaj Finance has delivered largely inline results in Q3FY23 by laying a 27.6% YoY and 9% QoQ increase in the interest income to Rs.9,273 cr. Net profits of the company grew by 40% YoY to Rs.2,973 cr. due to the healthy operating performance and lower provisions.
- Net Interest Income of the company grew significantly with an increase of 24% YoY to Rs.7,435 cr. while Net Interest Margin decreased by 55 bps on YoY basis to 13.24%.
- In the quarter, loan losses and provisions stood at Rs.841 cr., down by 20% on YoY basis and the company further expects it to be in the range of 1.4-1.5% of average assets in FY23.
- Company’s total asset under management grew to Rs.2.31 lakh cr. by 27% YoY in Q3FY23 compared to Rs.1.81 lakh cr. in Q3FY22. New loans booked in the quarter was highest ever at 7.84 mn vs 7.44 mn in Q3FY22.
- Among businesses, Securities lending AUM and commercial lending AUM grew with 45% and 42% respectively on YoY basis. SME lending AUM and mortgages AUM also increased with 33% and 26% YoY.
- Asset quality of the company remained stable with Gross NPA of 1.41% decrease of 59 bps YoY and Net NPA ratio at 0.41% decrease of 37 bps YoY.
- Customer acquisitions in the quarter were at record level at 3.14mn and the company estimates it to be over 11mn in FY23.
- The company has released Long Range Strategy (LRS) which is an annual 5-year rolling strategy planning process with an execution plan of 12-24 months. Through this strategy, company is planning to launch new auto loans in Q2 FY24, Micro Finance in Q4 FY24 and tractor financing in Q1 FY25. Also company has planned to open 100 locations in UP, Bihar, North-East and another 100 locations in FY25.
- It has added 29 new locations and 600+ distribution points in the quarter, aggregated to total 3,714 locations and over 1,43,900 distribution points at the end of December 31, 2022.
- During the quarter, company acquired ~41.5% stake in Snapwork Technologies Private Limited for ₹ 92.74 crore for strengthening of its technology roadmap.
Outlook:
Bajaj Finance reported healthy Q3FY23 results with PAT surging 40% YoY due to the 20% decline in the provisions and loan loss. Net Interest Income of the company increased by 24% on the back of increased growth in loan disbursements. Customer’s acquisition and the new loan trajectory remains strong in the quarter along with improved asset quality. Bajaj Finance has delivered the earnings of Rs.49.20 in the last 9 months and we expect the company to close FY23 at the estimated EPS of Rs.65.6 and on the basis of estimated earnings the PE of the bank stands at 87.7x on current price.
Results:
Particulars (In Rs. Cr.) |
Q3FY23 |
Q2FY23 |
Q3FY22 |
QoQ% |
YoY% |
9MFY23 |
9MFY22 |
FY22 |
Interest Income |
9,273 |
8,509 |
7,265 |
9.0% |
27.6% |
25,703 |
19,909 |
27,277 |
Fees and Commission Income |
1,107 |
1,072 |
878 |
3.3% |
26.1% |
3,199 |
2,190 |
3,067 |
Net Gain on Fair Value changes |
119 |
84 |
60 |
41.0% |
99.3% |
249 |
228 |
328 |
Sale of Services |
22 |
27 |
40 |
-19.1% |
-45.2% |
43 |
75 |
75 |
Other Operating Income |
263 |
278 |
295 |
-5.6% |
-10.8% |
844 |
613 |
893 |
Revenue from operations |
10,784 |
9,970 |
8,537 |
8.2% |
26.3% |
30,038 |
23,014 |
31,640 |
Other Income |
2 |
2 |
2 |
-19.9% |
-33.5% |
5 |
5 |
8 |
Total Income |
10,786 |
9,972 |
8,539 |
8.2% |
26.3% |
30,043 |
23,019 |
31,648 |
Interest Expended |
3,351 |
2,971 |
2,535 |
12.8% |
32.2% |
8,968 |
7,186 |
9,748 |
Fees and Commission Expense |
466 |
478 |
452 |
-2.5% |
3.2% |
1,404 |
1,255 |
1,754 |
Impairment on Financial instrument |
841 |
734 |
1,051 |
14.6% |
-20.0% |
2,330 |
4,102 |
4,803 |
Employee Expense |
1,286 |
1,239 |
1,016 |
3.7% |
26.6% |
3,708 |
2,569 |
3,590 |
Depreciation and amortisation expense |
119 |
121 |
97 |
-1.6% |
23.2% |
351 |
280 |
385 |
Other Expense |
711 |
676 |
521 |
5.2% |
36.4% |
2,015 |
1,389 |
1,865 |
Profit Before Tax |
4,012 |
3,752 |
2,868 |
6.9% |
39.9% |
11,267 |
6,238 |
9,504 |
Tax |
1,039 |
972 |
743 |
6.9% |
39.9% |
2,917 |
1,630 |
2,476 |
Profit After Tax |
2,973 |
2,781 |
2,125 |
6.9% |
39.9% |
8,350 |
4,609 |
7,028 |
PAT Margin (%) |
27.6% |
28.6% |
27.1% |
-110 bps |
40 bps |
27.8% |
20.0% |
22.2% |
Financial Snapshot |
Q3FY23 |
Q3FY22 |
YoY% |
9MFY23 |
9MFY22 |
YoY% |
Asset Under Management |
2,30,842 |
1,81,250 |
27.4% |
2,30,842 |
1,81,250 |
27.4% |
Asset Under Finance |
2,25,399 |
1,74,775 |
29.0% |
2,25,399 |
1,74,775 |
29.0% |
Net Interest Income |
7,435 |
6,005 |
23.8% |
21,075 |
15,833 |
33.1% |
Ratios (%) |
Q3FY23 |
Q2FY23 |
Q3FY22 |
Gross NPA |
1.14 |
1.17 |
1.73 |
Net NPA |
0.41 |
0.44 |
0.78 |
Net Interest Margin |
13.24 |
13.26 |
13.79 |
Source: Company website, EWL Research
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