Bajaj Finance Ltd. Q4FY21 - Earning Analysis | Globe Capital
17-Nov-2021
Bajaj Finance Ltd. Q4FY21 – Earning Analysis

At the CMP of Rs. 4873, the stock is trading at annualised P/E multiple of 66 times with the full year EPS of Rs 73.58 per share.

Q4 FY21 Overview and Verdict
CMP
Rs. 4873
Verdict
Lower than estimates

At the CMP of Rs. 4873, the stock is trading at annualised P/E multiple of 66 times with the full year EPS of Rs 73.58 per share. 

Its quarterly profits surged 42% at Rs 1347 cr. as compared to Rs 948 cr helped by a fall in borrowing costs, provisions for defaults, and a rise in fee income. 

Its total income fell by 5% at Rs. 6855 cr as compared to Rs 7231 cr. 

Its net Interest Income (NII) dropped marginally to 4,659 crore as against Rs 4,684 crore a year ago. The company reversed interest income Rs 298 crore during the quarter compared to Rs 122 crore reversed in the quarter ended March 2020.

Loan-loss provisions in the quarter fell to Rs 1,201 crore from Rs 1,865 crore in the year-ago quarter. 

During the quarter, the company did accelerated write-offs of Rs 1,530 crore of principal outstanding on account of Covid-related stress and advancement of its write off policy.

Gross bad loans edged up to 1.79% from 1.61% a year ago. The company has provisioning coverage ratio of 58% on stage 3 assets and 181 basis points on stage 1 and 2 assets as of 31 March 2021.

Dividend – The board also declared a dividend of Rs 10 per share.

The consolidated assets under management (AUM) rose 4% to Rs 1.52 lakh crore from Rs 1.47 lakh crore a year ago. However, the total new loans booked during the quarter at 5.47 million were still lower than 6.03 million reported last year indicating the slow post pandemic recovery.

Deposits book stood at Rs. 25,803 crore, a growth of 20% YoY. Its contribution to consolidated balance sheet was 20% as of 31 March 2021. Deposits book grew by Rs. 2,026 crore in Q4 FY21. 

Management Takeaways:

The management is confident of delivering growth for the full year despite partial lockdowns halving loan originations in some segments in the first 10 days of the new fiscal year as it could accelerate disbursements in subsequent quarters.

The management is focused on continuous innovation to transform customer experience and create growth opportunities.

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