MOSL: BAJAJ FINANCE (Neutral)-Strong growth despite liquidity crunch
Bajaj Finance: Strong growth despite liquidity crunch
(BAF IN, Mkt Cap USD20.4b, CMP INR2516, TP INR2400, 5% Downside, Neutral)
- Bajaj Finance (BAF) reported 3QFY19 PAT at INR10.6b (8% beat), a growth of 54% YoY, despite tough liquidity situation and higher-than-expected credit cost of INR4.5b (of which INR2.85b was a write-off).
- In line with previous quarters, AUM was on growth trajectory rising 41%/10% YoY/QoQ to INR1.1t. Consumer finance/SME finance grew smartly by 40%/37% on a YoY basis. The share of Bajaj 2Ws financed by BAF increased from a run-rate of 35% to 52% in 3Q.
- As opex (+31% YoY) grew slower than total income (+46% YoY), C/I ratio declined 400bp YoY to 35%. Also, operating profit grew by 56% YoY to INR20.9b.
- Asset quality inched up marginally to 1.55% GNPA (+5bp QOQ). Given that BAF completed a write-off of INR2.85b, PCR declined 400bp QoQ to 60%. BAF has an exposure of INR2.25b to IL&FS, of which it has provided 20%; cash flows are regular in the escrow account.
- BAF has maintained ~8% of its balance sheet in cash and liquid investment. BAF, on a consol. basis, raised INR193b/INR63b of funds from the money markets/banks during the quarter. As a result, reported cost of funds remained largely similar at 8.2%.
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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