MOSL: BAJAJ FINANCE (Buy)-Growth outlook positive, improving asset quality
Bajaj Finance: Growth outlook positive, improving asset quality
(baf IN, Mkt Cap USD17.4b, CMP INR2067, TP INR2450, 19% Upside, Buy)
- Bajaj Finance’s (BAF) 4QFY18 PAT rose 61% YoY to INR7.2b (12% beat), driven by 40% YoY AUM growth and lower-than-expected credit cost.
- SME (31% of AUM) grew at a healthy 19% YoY, contributing ~30% of incremental AUM growth sequentially. Management expects SME book to grow smartly in FY19. Consumer (+44% YoY), Commercial (+57% YoY) and Rural (+100% YoY) traction remains strong, with growth across product lines.
- Tie-up with RBL is showing strong traction – it has already issued 0.4m cards and the target is to end with 1m cards by end-CY18.
- Mr Atul Jain will be heading the housing finance subsidiary. Management indicated that mortgage will be ~35% of balance sheet in 2-3 years. BAF also indicated to infuse another INR10b in Dec-2018 into the housing finance subsidiary.
- Asset quality improved 20bp QoQ, with a GNPA ratio of 1.48%. In 2W lending, the 0dpd+ portfolio improved sequentially from 12.2% to 10.6%. Similarly, in the LAP portfolio, 0dpd+ dues improved ~100bp to 0.79%.
Bajaj Finance Limited is a non-banking finance company (NBFC). The Company 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. Its SME lending products include loan against property and business loans. Its commercial lending products include loan against securities and financial institutions group lending business. Its rural lending products include personal loans cross-sell, salaried personal loans and gold loans. It offers retail fixed deposits and wholesale fixed deposits. It is engaged in life insurance distribution, general insurance distribution and mutual fund distribution.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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