Bajaj Finserv stock under pressure after Bajaj Finance announces Covid-19 second wave impact on biz for FY22

Bajaj Finance expects an impact of Rs4,000-Rs5000cr to its Asset Under Management (AUM) growth plan for FY22, "on account of the disruption caused by the second wave."

Jun 07, 2021 10:06 IST India Infoline News Service

Bajaj Finserv was under pressure on Monday's trading pressure after its non-banking financial subsidiary, Bajaj Finance announced Covid-19 second wave impact on its business for the financial year FY22. Bajaj Finance expects a significant impact on asset quality, credit costs, asset under management (AUM) and others. Bajaj Finserv is the parent organization of Bajaj Finance.

On Sensex, in the early deals, Bajaj Finserv has plummetted by nearly 4% with an intraday low of Rs11683.45 per piece. The stock remained under selling bias and weighed down markets further.

At around 10.35 am, Bajaj Finserv was trading at Rs11750 per piece nosediving by Rs402.40 or 3.2% on Sensex.

In its regulatory filing, Bajaj Finance said that B2B and Auto Finance businesses were most affected due to strict lockdowns in the majority of states. These businesses delivered 70% of their planned volumes in April 2021 as multiple states started imposing lockdowns from mid-April. Their volumes dropped to 40% in May 2021. Most states have indicated continued lockdown till 7th or 15th June. With the expected reopening, June should be much better.

Bajaj Finance expects an impact of Rs4,000-Rs5000cr to its Asset Under Management (AUM) growth plan for FY22, "on account of the disruption caused by the second wave. However, Q1 FY2022 will see a higher impact on AUM due to lower volumes in B2B businesses."

"The second wave has caused a marginal increase in EMI bounce rates in Q1 FY22 over Q4 FY21. Average EMI bounce rates in Q1 FY22 were approximately 1.08X of Q4 FY21," Bajaj Finance said.

Bajaj Finance added, "Forward flows across overdue positions were higher due to constraints on collections amidst strict lockdowns across most parts of India. As a result, the Company estimates its GNPA and NNPA in Q1 and Q2 to be higher."

With that, Bajaj Finance forecasted an incremental credit cost of Rs1,100-1,300 crore versus planned credit cost in FY2022 on account of disruption caused by the second wave.

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