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.

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    Stock Details

    Market Cap. (Cr.) 348485
    Equity (Cr.) 121.09
    Face Value 2
    52 Wk. high/low 7777 / 5236
    BSE Code 500034
    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.


    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.


    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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