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MOSL: MOrning India (4/September/19): 1. Bajaj Finance - Annual Report Update (Profitability improving); 2. Financials; 3. Automobiles

MOrning India (4/September/19): 1. Bajaj Finance - Annual Report Update (Profitability improving); 2. Financials; 3. Automobiles

 

Today’s top research idea

Bajaj Finance (Annual Report Update): Profitability improving; High fee income, low expense ratio – key drivers of RoA improvement

• Bajaj Finance's (BAF) customer base growth accelerated to 32% YoY in FY19 from 28% over the prior two years.
• The number of new loans disbursed increased at a consistent pace of ~50% YoY in the year. While BAF toned down its 2W disbursements in FY18, it did the opposite in FY19 (volumes up 50% YoY to 1.02m in FY19).
• Outstanding AUM now stands at INR97b, almost equal to that of HDFCB. Interestingly, the average ticket size increased from INR56k in FY16 to INR81k in FY19 - higher than that of most peers.
• Total fees more than doubled from INR8b to INR17b YoY in FY19, driven by ~3x increase in distribution income to INR6.6b during the year. Interestingly, the unsecured loan book of BAF has lower stage-2/3 loans (0.8%/1.4%) compared to the secured loan book (2.4%/1.7%).

Piping hot news

Rupee closes at more than 9-month low

The Indian rupee on Tuesday closed at a more than nine-month low against the dollar after economic growth slowed to a six-year low, stoking concerns of further outflows from domestic equity markets. The 10-year government bond yield fell on rising expectations of a deeper interest rate cut. The local currency closed at 72.39 against the greenback—a level last seen on 13 November 2018—down 1.36% from the previous close of 71.41.