Bajaj Finance Ltd. Q4FY21 - Earning Analysis | Globe Capital Market LTD.
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.

Disclosure

Globe Capital Market Limited (“GCML”) is a Stock Broker registered with BSE, NSE and MSEI in all the major segments viz. Capital, F & O and CDS segments. GCML is also a Depository Participant and registered with both the Depositories viz. CDSL and NSDL. Further, GCML is a SEBI registered Portfolio Manager. GCML includes subsidiaries, group and associate companies, promoters, directors, employees and affiliates. 

Globe Commodities Limited, Globe Derivatives and Securities Limited & Globe Fincap Limited are subsidiaries of GCML. Rolex Finvest Private Limited, A to Z Consultants Private Limited, A to Z Venture Capital Limited, M. Agarwal Stock Brokers Private Limited, A M Share Brokers Private Limited, Shri Adinath Advertising Company Pvt. Ltd., Orient Land base Private Limited, Bolt Synthetic Private Limited, Price ponder Private Limited and Lakshya Impex Private Limited  are associates of GCML. Globe Comex International DMCC is step down subsidiary of GCML. 

This report has been prepared by GCML and published in accordance with the provisions of Regulation 19 of the Securities and Exchange Board of India (Research Analysts) Regulations, 2014, for use by the recipient as information only and is not for general circulation or public distribution. This report is not to be altered, transmitted, reproduced, copied, redistributed, uploaded, published or made available to others, in any form, in whole or in part, for any purpose without prior written permission from GCML. The projections and the forecasts described in this report are based on estimates and assumptions and are inherently subject to significant uncertainties and contingencies. Projections and forecasts are necessarily speculative in nature, and it can be expected that one or more of the estimates on which the projections are forecasts were based may not materialize or may vary significantly from actual results and such variations will likely increase over the period of time. This report should not be construed as an offer to sell or the solicitation of an offer to buy, purchase or subscribe to any securities, and neither this report nor anything contained therein shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. It does not constitute a personal recommendation or take into account the particular investment objective, financial situation or needs of any individual in particular. The research analysts of GCML have adhered to the code of conduct under Regulation 24 (2) of the Securities and Exchange Board of India (Research Analysts) Regulations, 2014. The recipients of this report must make their own investment decisions, based on their own investment objectives, financial situation or needs and other factors. The recipients should consider and independently evaluate whether it is suitable for its/ his/ her/their particular circumstances and if necessary, seek professional / financial advice as there is substantial risk of loss. GCML does not take any responsibility thereof. 

Any such recipient shall be responsible for conducting his/her/its/their own investigation and analysis of the information contained or referred to in this report and of evaluating the merits and risks involved in securities forming the subject matter of this report. The price and value of the investment referred to in this report and income from them may go up as well as down, and investors may realize profit/loss on their investments. Past performance is not a guide for future performance. Actual results may differ materially from those set forth in the projection. 

This report has been prepared by GCML based on the information available in the public domain and other public sources believed to be reliable. Though utmost care has been taken to ensure its accuracy and completeness, no representation or warranty, express or implied is made by GCML that such information is accurate or complete and/or is independently verified. The contents of this report represent the assumptions and projections of GCML and GCML does not guarantee the accuracy or reliability of any projection, assurances or advice made herein. Nothing in this report constitutes investment, legal, accounting and/or tax advice or a representation that any investment or strategy is suitable or appropriate to recipients’ specific circumstances. 

Since GCML or its associates are engaged in various financial activities, they might have financial interest or beneficial ownership in various companies including subject company/companies mentioned in the report. GCML or its associates have not received any compensation for investment banking or merchant banking from the subject company in the past 12 months.  GCML or its associates might have received any compensation including brokerage services and for products or services other than investment banking or merchant banking from the subject company in the past 12 months. It is confirmed that GCML or research analyst or its associates have not managed or co-managed public offering of securities for the subject company in the past 12 months. 

Research analyst or GCML or its relatives’/associates’ have no material conflict of interest at the time of publication of this report. Neither research analyst nor GCML are engaged in market making activity for the subject company. It is confirmed that research analysts do not serve as an officer, director or employee of the subject company. It is also confirmed that research analyst have not received any compensation from the subject company in the past 12 months. 

No material disciplinary action has been taken on GCML by any regulatory authority impacting Equity Research Analysis activities. 

The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. This information is subject to change, as per applicable law, without any prior notice. GCML reserves the right to make modifications and alternations to this statement, as may be required, from time to time. 

Research analyst or GCML or its relatives’/associates’ do not have actual/beneficial ownership of 1% or more in securities of the subject company, at the end of the month immediately preceding the date of publication of the document.