MOSL: BAJAJ FINANCE (Buy)-Getting better by the day
​​Bajaj Finance: Getting better by the day
(BAF IN, Mkt Cap USD13.1b, CMP INR1543, TP INR1800, 17% Upside, Buy)
- Bajaj Finance's (BAF) 1QFY18 PAT increased 42% YoY to INR6b (4% beat). However, this belies its strong operating performance - PPoP grew 46% YoY (6% beat), driven by robust AUM growth of 39% YoY, and margins expanded strongly by 90bp YoY to 12.9%.
- AUM continued its robust growth trajectory (+39% YoY, +4.4% QoQ) to reach INR688b, led by impressive growth in consumer finance (+43% YoY) and commercial business (+68%). Within consumer business, personal cross-sell loans grew 59% YoY to INR69.6b (tenth consecutive quarter of 50%+ AUM growth), while salaried home loans rose 83% YoY. The company's penetration of Bajaj 2Ws remained at 37%.
- Management is bullish on the prospects of REMI card financing and mobile financing, going forward. Also, according to management, there are over 40m people with a prime CIBIL score, of which only 25-30% are BAF's customers. The company plans to further penetrate in this segment.
- GNPLs remained stable at 1.7% in 1QFY18 (at 90dpd). The company took provisions of INR240m due to asset quality problems in the 2W portfolio and INR180m on legacy infrastructure lending NPLs. Management has guided that there will be another hit of ~INR300-400m for the 2W portfolio over the next two quarters.
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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