MOSL: BAJAJ FINANCE (Buy)-Strong operating performance continues
​Bajaj Finance: Strong operating performance continues
(BAF IN, Mkt Cap USD8.3b, CMP INR1323, TP INR1550, 17% Upside, Buy)
- Bajaj Finance's (BAF) 4QFY17 PAT increased 43% YoY to INR4.5b (in-line). PPoP grew 52% YoY (9% beat), driven by robust AUM growth of 36% YoY and better-than-expected margin performance (11.4%, +130bp YoY). Higher provisions of INR2.9b (incl. INR700m additional provisions on account of demon and non-recurring provisions) led to in-line PAT.
- AUM continued its robust growth trajectory (+35% YoY, +4.5% QoQ) to reach INR602b, led by impressive growth in the consumer finance (+43% YoY) and commercial business (+51%) segments. Within consumer business, personal cross-sell loans grew 60% YoY to INR61.6b (ninth consecutive quarter of 50%+ AUM growth), while salaried home loans grew 93% YoY. Interestingly, the company scaled back on its penetration of Bajaj 2Ws (from 42% to 37% QoQ).
- GNPLs increased 21bp QoQ to 1.7% in 4QFY17. The company took one-off general provisions of INR700m due to demon-related issues in the quarter. Management has guided for normal credit costs in FY18.
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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