Downgrades

Bajaj Finserv reported a resilient Q2 FY26, supported by steady performance across lending and insurance businesses. Bajaj Finance and Bajaj Housing Finance recorded healthy AUM growth and solid profitability, while Bajaj Life delivered its highest-ever VNB and margin expansion.

in the financing business (Bajaj Finance), life insurance (Bajaj Life Insurance), general insurance (Bajaj General Insurance) and securities business. Consistent, faster business growth and profitability remain in focus momentum sustaining and improvement in life insurance profitability, while general insurance remained subdued. Consolidated revenue grew 11% YoY to 37,403 crore. NBFC AUM rose 24% YoY to 4,62,261 crore, with PAT from lending up 22% YoY to 4,876 crore, reflecting robust disbursement and broadly stable asset quality (GNPA at 1.24%, NNPA at 0.6%). In GI premium grew 9% YoY to...

Aditya Birla Capital Limited (ABCL) reported a decent set of numbers with reported PAT at INR 7.36bn for Q3FY25, lower 4% YoY and 15% QoQ (vs. adjusted PAT of INR 8.34bn in Q2FY25).

Aditya Birla Capital (ABCAP)’s 3QFY25 consolidated revenue grew 10% YoY to ~INR109b and consolidated PAT declined ~3% YoY to ~INR7.1b.

ABCAP reported mixed results in Q3FY25, with: 1) NBFC performing well on asset quality, but weaker on growth, NIMs, and RoA owing to a shift toward secured products.

BJFIN reported a satisfactory performance in Q2FY25 with reasonable performances posted by its established operating subsidiaries (BAF, BAGIC, and BALIC) amid the difficult and changing external environment.

Godrej Industries (GIL) generates major value from its listed subsidiaries and associates viz. Godrej Consumer, Godrej Properties and Godrej Agrovet. As per I-Sec target prices for Godrej Consumer, Godrej Properties and Godrej Agrovet and 50% holdco discount, GIL’s value works out to INR 760/share.

Godrej Industries (GIL) generates major value from its listed subsidiaries and associates viz. Godrej Consumer, Godrej Properties and Godrej Agrovet. As per I- Sec target prices for Godrej Consumer, Godrej Properties and Godrej Agrovet and 50% holdco discount, GIL’s value works out to Rs628/share.

JM Financial’s (JMF) Q3FY23 earnings were characterised by: 1) Consolidated loan growth was up 4% QoQ (on a higher base) and 36% YoY. 2) Retail mortgage disbursements were up 17% QoQ/ 34% YoY; AUM was up 86% YoY; network rises to 78 branches vs 50 YoY.

Aditya Birla Capital’s (ABCL) Q3FY23 earnings reflect acceleration in growth momentum and progressive expansion in NIM trajectory. Overall, consolidated PAT (excluding fair value and stake sale gains) of Rs5.3bn (up 27% YoY) was above our estimate of Rs5.1bn. RoA of 2.4%/ 1.9% in the NBFC/ HFC subsidiaries improve visibility on achieving the FY24 guidance ahead of the targeted period.

JM Financial’s (JMF) Q2FY23 result was characterised by: 1) Much-awaited loan growth finally materialising with 16% QoQ / 32% YoY expansion.

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Consolidated AUM witnessed QoQ growth of 4% YoY to | 152947 crore, led by mortgages. NII remained broadly flat YoY at | 4,659 crore. Lower provision at | 1230 crore led to higher earnings at | 1346 crore, up 42% YoY and 18% QoQ. Asset quality has synced with proforma GNPA, NNPA by Q4 reaching at 1.79%, 0.75% (post ~| 2000 crore i.e. 1.3% write-off in Q4) from proforma GNPA, NNPA of 2.86%, 1.22%, respectively, in Q3FY21. Gross written premium (GWP) in general insurance increased 5% YoY to | 2787 crore. Excluding crop insurance, GWP increased 10% YoY to | 2663...

Bajaj Finserv (BFS; holding company) saw consolidated net profit in Q1FY21 rise by 43.7% to Rs. 1,215 crore, while revenue increased by 15.6% y-o-y to Rs. 14,190 crore, which were better than expectations, mainly on the back of strong earnings from its insurance subsidiaries. The lending subsidiary Bajaj Finance Ltd (BFL) reported mixed numbers for Q1FY20, with tepid business growth, but a q-o-q improvement in asset quality and a decline in moratorium share to 15.7% of AUM from 27%, was a positive. Assets under management (AUM) stood at Rs. 138,055 crore, down 6% q-o-q due to steps like more stringent loan-to-value (LTV) ratios, tightened credit filters, etc....

Stong Insurance Performance; Lending Arm Equipped toWithstand COVID-19 Shock: In Q4FY20, Bajaj FinServ reported consol PAT of Rs. 1.9 Bn, down 77% YoY owing to the following COVID19 related impacts, a) MTM losses on BAGIC & BALIC investments of Rs. 7.7 Bn and b) contingency provision of Rs. 9.0 Bn made by lending arm, Bajaj Finance (BAF).

PAT for NBFCs has plummeted 33%/40% QoQ/YoY to INR1.37b due to (a) loans declining 9%/2% YoY/QoQ to INR470b, and (b) higher credit cost (2.7% v/s 0.5% in 4QFY19), led by COVID related provision of INR1.6b and 90bp QoQ rise in GS3 to 3.6% (+30% to HFC loans were flat QoQ and up 6% YoY to INR121b, AMC AAUM grew 1%/2% QoQ/YoY to INR2.67t; 4QFY20 PAT declined 24% QoQ/YoY to INR1b, impacted by mix change and INR200m MTM loss Life Insurance business reported EV of INR51.9b (+6% YoY)and RoEV of 13.2%. Few mid-large corporate NPLs are under resolution, which are delayed due to FY20 has been a challenging year for the company with slowdown in loan Resolution of some corporate NPLs is underway; however, we do not foresee any meaningful resolutions in the near term given the overall We see significant moderation in business growth and earnings pressure in high profit contributing segments like Lending and the Asset Management business.