The 40 reports from 10 analysts offering long term price targets
for Bajaj Finance Ltd. have an average target of 4989.22. The consensus estimate
represents a downside of -19.53%
from the last price of 6200.00.
We revise our FY22/FY23 earnings downward by 9.1%/2.0% on account of higher credit costs and downgrade the stock to REDUCE from ADD with a revised TP of INR 4,832 from INR 4,928 (implied 5.5x Mar'23 ABV), implying a 19% downside Bajaj Finance (BAF) issued mid-quarter business guidance around the likely impact of the second wave on the companys AUM growth (lower by INR40-50bn) and credit costs (higher by INR11-13bn). The net impact of this update is neutral on our AUM growth estimates (we were conservative on AUM accretion compared to the managements earlier guidance) while we raise our above-consensus provisioning forecasts further. The >20% run-up in the stock since its Q4FY21 earnings appears to be pricing in unrealistic consensus expectations around growth and profitability, which warrants a reality check in light of this profit warning.
Bajaj Finance Ltd (BAF) has released its mid-quarter update highlighting the impact of the second COVID wave on AUM (INR40-50b, 3% of outstanding AUM) and provisioning (INR11-13b, 0.8% additional credit cost). A large portion of the provisioning is likely to be up-fronted in 1Q. New origination in B2B/other businesses are down to 40/60% vs planned level in May. We have tweaked our estimate based on the revised guidance. Despite an earnings cut of ~11% for FY22, ROEs are likely to be strong at 20%, and we believe the impact is likely to be transient. With the process of unlocking having...
Net Interest Income declined marginally 0.5% YoY to Rs. 4,655cr. AUM improved multi quarter high 3.9% YoY on rising mortgage book. Pre-provisioning profit dropped 5.5% YoY Rs. 3,053cr on higher operating expenses. However net profit went up 42.0% YoY to Rs. 1,347cr on account of significant decline in provision expenses. Adequate provisioning owing to COVID, better asset quality and higher collection efficiency should provide strong base for further growth. We reiterate our BUY rating on the stock with a revised target price of Rs....
provisions. Profit in the same quarter of the previous year was Rs 948.1 crore. During the quarter, the company has done accelerated writeoffs of around Rs 1,530 crore of principal outstanding on account of COVID-19 related stress and advancement of its writeoff...
Nippon Life India Asset Management: NAM has been able to stabilize its market share in the high-margin equity segment over the past two quarters at 7%. We expect it to focus on improving performance to continue recouping its lost market share. Additionally, we expect the company to benefit from increased credibility to raise HNI/institutional capital. Driven by cost optimization, we expect the company to deliver an FY21-23E revenue/NOPLAT CAGR of 12.7/17.5%. We maintain our ADD rating on the stock with a target price of INR360, valuing the stock at 36x Mar-23E NOPLAT + Mar-22E cash and investments. The stock is currently trading at FY22E/23E EV/NOPLAT of 39.9/32.8 and P/E of 34.4/28.9x. Symphony: Symphony clocked an all-round recovery with domestic, exports and subsidiaries revenues seeing beat in expectation. High trade inventory impacted domestic revenue during 9MFY21 (down by 50% YoY) while the strong 28% YoY growth in 4QFY21 (despite a firm base) reflects positive sentiment of trade partners. RoW revenue grew by 46% YoY, owing to robust exports (delay in shipment in 3Q) and recovery of CT, Australia (up 85% YoY). Thereby, consolidated revenue saw robust 36% growth. Domestic EBIT margin contracted by >650bps YoY, owing to high commodity inflation and delay in price hike. RoW EBIT margin saw sharp improvement (18% vs. 2% YoY) due to margin recovery in CT, Australia (EBITDA margin of 17% vs. -2% YoY). We are encouraged by an all-round recovery (key rationale for our stock upgrade in Jan-21); however, localised lockdown has raised concerns on summer-2021 performance for cooling products. As...
surprise on asset quality. While continued accelerated write-offs supported NPA decline (107bpsQoQ to 1.8%), bounce rates and collections are back to pre-COVID levels. Barring auto and mortgages that remained pain-points, the Co.'s OTR portfolio (now part of Stage 2) remains under stress led by 36% unsecured assets, 57% secured and one large B2B account (6% of total OTR). In light of higher provisioning (58%PCR, 181bps on Stage 1 & 2) and upbeat...
Bajaj Finance posted a steady set of numbers on the business and operational front with QoQ improvement in AUM, profitability being boosted by lower provisions. With high frequency risk, collections not warranting risk stance change guidance remains the same. Hence, it is a welcome sign. Net interest income was marginally down 0.5% YoY but increased 8.4% QoQ to | 4655 crore. Interest reversals for the quarter were at | 298 crore vs. | 122 crore YoY, | 450 crore QoQ. Opex increased ~16% QoQ owing to rise in business activity and as a result C/I ratio was up from ~32% to 34.5%...
In Q3FY21, Net Interest Income rose 3.3% QoQ to Rs. 4,293cr, with improvement in business volume across segments. Pre-provisioning profit stood at Rs. 2,906cr (-3.3% YoY) and provisions at Rs. 1,352cr....
Bajaj Finance has posted 29% decline in the net profit to Rs 1145.98 for the quarter ended December 2020 (Q3FY2021). Income from operations on a consolidated basis fell 6% to Rs 5722.46 crore, while other income rose 2% to Rs 936.01 crore. Total income eased 5% to Rs...
During the quarter, the Company has also done one-time principal write-off of 1,970 crore, on account of Covid related stress. The Company holds management overlay provision of 800 crore as of 31 December 2020 for Covid related stress. Consolidated AUM witnessed QoQ growth of 4% YoY to | 143550 crore, declining 1% YoY. The Company expects core AUM growth to resume to pre-Covid levels by Q4FY21. Consumer B2B declined 16% YoY but improved 10% QoQ to | 22893 crore. NII declined 4% YoY to | 4296 crore, in line with estimates. NII for the quarter...
GNPL ratio (excluding the SC dispensation on term loan EMIs payments) increased to 2.86% from 1.34% QoQ. BAF wrote-off ~INR20b worth of loans (1.4% of loans) and restructured INR20.4b worth of loans (1.4% of loans). The management also lowered its credit cost guidance for FY21...
reversals to the tune of Rs4.5bn and slower fee income traction (mere3% QoQ growth) due to caution on disbursements drove down PPoP with a decline of 3% QoQ and YoY. PAT at Rs11.5bn stood broadly in-line (PLe: Rs11.8bn) growing 19%QoQ led by lower provision (down 21%QoQ) as credit costs on standard assets stood down (190 bps in Q3 v/s 369 bps in Q2) with collection efficiencies reverting to pre-COVID levels in early buckets. Yet, BAF reported...
Opening up of businesses, collections closer to pre-Covid levels and adequate provisioning buffers for any untoward stress indicate positive undercurrents for NBFCs. Closer to higher single digit AUM growth, NIM improvement underpinned by reduced B/S liquidity and peaked out credit costs sum up Q3FY21 earnings expectations. Gold and housing financiers should continue to outshine other asset classes both in terms of growth and asset quality. Yet, H2FY21 should provide better clarity on asset quality picture across all NBFCs as 90dpd and credit bureau score freeze lift. While...
delinquency control until clarity emerging on credit bureau stands credible. Against this backdrop and strong price momentum, we believe BAF is entering into a priced-to-perfection zone. Hence, we downgrade the stock to Accumulate (earlier BUY) valuing BAF at 6.7x PABV Mar'23E implying price target of Rs 5,491. BAF stands poised to deliver 19-20% ROEs/3.8% RoAs by...
Bajaj Finance has sailed through the headwinds and emerged stronger with a leaner operating model and robust growth guidance. RBI's new banking licence review has recommended that large NBFCs with >| 50000 crore assets with 10 year existence can apply for banking licence. Also, the management commentary to consider the same if it is favourable bodes well for the long term view of the stock. Growth guidance of ~25% for FY22E and opportunity to apply for banking licence have resulted in renewed interest of investors in the stock....
Q2FY21 AUM grew 1.1% YoY to Rs. 137,090cr. As of 30th Sep, the AUM under moratorium improved to 8.0% (15.7% in Q1FY21). Net Interest Income rose 4.0% YoY to Rs. 4,158cr. However, PAT slipped 35.9% YoY, as provisions rose to Rs. 1,700cr from Rs. 594cr in Q2FY20....
