Bajaj Finance Q1 Results Review - Remains On Strong Footing: Yes Securities

Yes Securities Report

Bajaj Finance Ltd. delivered a small beat on net interest income aided by resilient net interest margin; however, marginally higher credit cost precluded an-earnings beat.

Besides the already revealed strong traction in new loans bookings, customer base and assets under management, the quarter had additional positives of solid growth in business-to-business disbursements, sustained growth momentum in small and medium enterprise, commercial and mortgages, opex/NII further improving on the back of rising traction on digital platforms and moderation in gross/net non-performing loan levels.

Incremental growth in mortgages continues to be led by lease rental discounting and developer finance, even as Bajaj Finance holds on to a reasonably healthy growth in home loans.

The only outlier in the quarter was higher credit cost which was driven by-

1. 8% sequential increase in stage-II loans (mainly in B2C business),

2. higher std. assets provisioning due to strong QoQ growth,

3. further strengthening of expected credit loss model (reflected in enhanced coverage levels) and

4. some provisioning made on Manipur portfolio due to unrest.

With a small benefit of lower tax rate (availment of exemption u/s 36 1 (viii) by Bajaj Housing Finance Ltd.), RoA was maintained at 5.4% and RoE marginally rose to 24.5%.

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