Bajaj Finance Ltd's Q1FY20 standalone net profit rises 34.9% yoy to Rs1,125cr : Misses Estimates

The company’s standalone NII stood at Rs3,508cr, down 40.21% yoy

Jul 25, 2019 08:07 IST India Infoline Research Team

Bajaj Finance Ltd Q1FY20

Standalone Results Q1FY20: (Rs. in cr)

Q1FY20 YoY (%)
NII 3,508 40.2
Net Profit (adjusted) 1,125 34.9

Bajaj Finance Ltd's (BAF) Q1FY20 standalone NII has come at Rs3,508cr, which has improved by 40.2% yoy. Its standalone net profit for Q1FY20 was below consensus estimates by 4%, which came at Rs1,125cr against Rs834cr for Q1FY19, which is up by 34.9% yoy. Its GNPA has increased by 2bps qoq to 1.56% from 1.54% and NNPA for the quarter under review came at 0.64%.
  • BAF’s core operating performance was marginally below estimates with total revenues and PPoP both falling short of our estimates by 2% and 3% respectively. However, provisions were much higher than estimated and led to the 9% miss in earnings. There is a clear sequential slowdown in growth.
  • Reported AUM growth was 41% yoy (38% yoy when adjusted for some one-off growth). However, sequential trends were weak when compared to previous years.
  • Slippages increased marginally from Rs600cr in 4QFY19 (3% of opening loans) to Rs700cr in 1QFY20 (3.2% of opening loans). NPA ratios have increased sequentially across segments except in commercial and mortgages.  
  • AUM growth: Up 41.2% yoy (40.4% yoy in 4QFY19) driven by strong growth in rural lending (55% yoy) and mortgages (51% yoy). However, AUM growth slowed down in SME and commercial lending to 34% and 25% yoy respectively. Though consumer loans grew at 40% yoy, it has also considerably slowed down from 56% in 4QFY19. Sequentially, there is a slowdown across segments.
  • NIM on AUM: NIM improved 53bps yoy, however declined 29bps qoq to 13.4% as yields came under pressure on a sequential basis. Costs of funds also saw a uptick of 146bps yoy and 10bps qoq to 10.4%.
  • Cost-to-income ratio: At 35%, saw a sharp decline of ~200bps yoy, however marginally increased by ~40bps qoq. Operating expenses growth of 35% yoy lagged total income growth of 43% yoy.
  • Asset Quality: GNPA at 1.60%, deteriorated 6bps sequentially. Provisions at ~Rs550cr saw a sharp increase of 69% yoy and 35% qoq in 1QFY20. PCR increased marginally by ~100bps to 61%.
  • New loans booked during Q1FY20 increased by 29% to 7.27mn from 5.63mn in Q1FY19. Customer franchise as of June 30, 2019 increased by 31% to 36.94mn from 28.28mn as of June 30, 2018. Assets under management (AUM) as of June 30, 2019 grew by 41% to ~ Rs1.29 lakh cr from Rs91,287cr as of June 30, 2018.
  • Net Interest Income for Q1FY20 was up by 43% to Rs3,695cr from Rs2,579cr in Q1FY19. Total operating expenses to net interest income for Q1FY20 was 34.98% against 37.02% in Q1FY19.
  • Loan losses and provisions (expected credit loss) for Q1FY20 was up by 69% to Rs551cr from Rs327cr in Q1FY19.
  • Provision coverage ratio came at 61% vs. 60% qoq.




Technical View:

Bajaj Finance Ltd is currently trading at Rs. 3,056, down by 115.6 points or 3.64% from its previous closing of Rs. 3,171.60 on the BSE.
The scrip opened at Rs. 3,195.25 and has touched a high and low of Rs. 3,242.25 and Rs. 3,050.10 respectively. So far 62,34,006 (NSE+BSE) shares were traded on the counter. The stock is currently trading above its 50 DMA.


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