Result Analysis: Bajaj Finance Limited (CMP: Rs.6055) Result Update: Q4FY23

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.) 366575
    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: 177.88
    P/BV: 7.63
    TTM P/E: 34.04

    Result Highlights:

    • Bajaj Finance has delivered strong results in Q4FY23 by laying a 30% YoY and 6% QoQ increase in the interest income to Rs.8,283 cr. Net profits of the company grew by 25% YoY to Rs.2,873 cr. due to the healthy operating performance and healthy customer additions.
    • Net Interest Income of the company grew significantly with an increase of 28.2% YoY to Rs.7,771 cr. Net Interest Margin increased by 20 bps on YoY basis to 13% while declined on QoQ by 20 bps due to the higher cost of borrowings.
    • Loan losses and provisions of the company has increased by 22% on YoY to Rs.859 cr. and it holds an additional Rs.960 a reserve to deal with unexpected losses.
    • Company’s total asset under management grew to Rs.2.47 lakh cr. by 25% YoY in Q4FY23 compared to Rs.1.97 lakh cr. in Q4FY22. New loans booked in the quarter stands at 7.56 mn vs 6.28 mn in Q4FY22; growth of over 20% YoY.
    • 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 Bajaj Finance improved further with Gross NPA of 0.94% decrease of 20 bps QoQ and Net NPA ratio at 0.34% decrease of 7 bps QoQ.
    • Customer acquisitions in FY23 were at record level of 11.57 mn (as estimated by the management) and the company estimates it to be in the range of 11mn-12mn in FY24.
    • It has added 19 new branches and 10,750 distribution points in the quarter, aggregated to total 3,733 branches and over 1,54,650 distribution points at the end of March 31, 2023.

    Financial Performance:


    Shareholding Pattern:

    Particulars (In %) Q4FY23 Q4FY22
    Promoters Group 55.86 55.92
    FIIs 22.19 16.49
    DIIs 11.23 16.45
    Public 9.54 9.95
    Others 1.18 1.19

    Management Commentary:

    • Management has guided for NIM moderation in FY24 by 40-50bps considering one more rate hike.
    • Guidance for AUM growth is at 28-29% and NII-to-opex of ~34% in FY24.
    • The company mentioned that its mortgage business is experiencing some decline. The segment with a ticket size of around INR5m is seeing less demand. But the high-end and luxury segments are still doing well.


    Bajaj Finance reported broadly in-lined Q4FY23 results with PAT surging 25% YoY and interest income increase of 30% YoY 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. Company would further benefit with the improved digital ecosystem and addition of new of new loan projects. Hence, we remain positive with the stock for the longer term perspective.


    Particulars (In Rs. Cr.) Q4FY23 Q3FY23 Q4FY22 QoQ% YoY% FY23 FY22 YoY%
    Interest Income 8,283 7,802 6,383 6% 30% 30,142 23,736 27%
    Fees and Commission Income 1,109 1,069 839 4% 32% 4,204 2,941 43%
    Net Gain on Fair Value changes 47 77 82 -39% -42% 208 260 -20%
    Sale of Services 16 6 33 168% -51% 29 43 -33%
    Other Operating Income 261 260 280 1% -7% 1,098 892 23%
    Revenue from operations 9,716 9,214 7,616 5% 28% 35,681 27,872 28%
    Other Income 2 1 3 65% -38% 5 7 -21%
    Total Income 9,718 9,215 7,619 5% 28% 35,687 27,879 28%
    Interest Expended 2,614 2,455 1,954 6% 34% 9,285 7,579 23%
    Fees and Commission Expense 498 470 504 6% -1% 1,934 1,782 9%
    Impairment on Financial instrument 803 811 664 -1% 21% 3,066 4,622 -34%
    Employee Expense 1,217 1,167 901 4% 35% 4,573 3,225 42%
    Depreciation and Amortisation expense 123 108 96 13% 28% 444 355 25%
    Other Expense 634 663 442 -4% 43% 2,502 1,730 45%
    Profit Before Tax 3,830 3,540 3,059 8% 25% 13,882 8,586 62%
    Tax 992 916 792 8% 25% 3,593 2,236 61%
    Profit After Tax 2,837 2,624 2,268 8% 25% 10,289 6,350 62%
    PAT Margin (%) 29.2% 28.5% 29.8% 100 bps -100 bps 28.8% 22.8% 600 bps
    EPS (in Rs.) 46.9 43.4 37.6 8% 25% 170.4 105.4 62%


    Financial Snapshot Q4FY23 Q4FY22 YoY% FY23 FY22 YoY%
    Asset Under Management (in Cr.) 2,47,379 1,97,452 25.3% 2,47,349 1,97,452 25.3%
    Number of loans booked (in mn.) 7.56 6.28 20.4% 29.58 24.68 19.9%
    Net Interest Income 7,771 6,061 28.2% 28,846 21,894 31.8%


    Ratios (%) Q4FY23 Q3FY23 Q4FY22
    Gross NPA 0.94 1.14 1.60
    Net NPA 0.34 0.41 0.68
    Net Interest Margin 13.00 13.20 12.80
    Source: Company website, EWL Research

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