Bajaj Finance -
Q2 results and concall highlights -
Q2 consolidated financial outcomes -
AUM @ 3.73 vs 2.90 lakh cr, up 29 pc YoY
Interest Income @ 14.98 vs 11.73 k cr, up 28 pc YoY
Interest expenses @ 6.14 vs 4.53 k cr, up 36 pc YoY
NII @ 8.83 vs 7.19 k cr, up 23 pc
Other Income ( including fee + sales of services, net gain on fair value changes ) - 2.10 vs 1.65 k cr, up 27 pc
Net total Income - 10.94 vs 8.84 k cr, up 24 pc
Operating expenses - 3.63 vs 3.01 k cr, up 21 pc
Pre Prov Operating profits - 7.30 vs 5.83 k cr, up 25 pc
Laon losses and provisions - 1.909 vs 1.077 k cr, up 77 pc
PAT - 4014 vs 3551 cr, up 13 pc
New loans booked in Q2 @ 97 vs 85 lakh in Q2 LY
New customers added in Q2 @ 39.8 lakh. Aim to add 1.5 cr customers for full FY 25. Total customer franchise now stands @ 9.2 cr. Cross sell franchise stands @ 5.7 cr customers
Total employee head count ( Bajaj Finance + Housing finance + Bajaj Fin Securities ) @ 59.4 k employees. Added 4k new employees in Q2
Gross NPAs @ 1.06 vs 0.91 pc
Net NPAs @ 0.46 vs 0.31 pc
In Q4 LY, Bajaj Auto started their own captive finance company by the name - Bajaj Auto Credit limited. As a result, Bajaj Finance’s share of financing of Bajaj Auto’s 2Ws and 3Ws has fallen sharply in Q1
Breakdown of company’s AUM ( loans ) as on 30 Sep 24 -
2W + 3W loans - 18.9 k cr
Urban sales finance - 27.2 k cr
Urban B2C loans - 77.2 k cr
Rural sales finance - 7.2 k cr
Rural B2C loans - 18.8 k cr
Gold Loans - 6.3 k cr
SME lending - 44.4 k cr
Car loans - 9.9 k cr
Commercial lending - 24.6 k cr
LAS - 23 k cr
Mortgages ( under Bajaj Housing Finance ) - 115.8 k cr
Total users of Bajaj Finserv App now stands @ 6.1 cr
Consolidated cost of funds stood @ 7.97 pc, up 3 bps on a QoQ basis
Opex to Total income stood @ 33.2 pc vs 34 pc YoY
Annualised employee attrition was higher vs LY @ 16.4 pc
Credit cost was elevated in Q2. Similar was the case in Q1 as well. Net increase in Stage 2 + Stage 3 loans in Q2 @ 542 cr vs Q1. Credit losses are inching up across retail and SME lines of business and across all geographies. Gross loss ratio in Q2 was 2.16 in Q2 ( @ 1909 cr ). It was 2.12 in Q1. Company estimates this ratio to fall below 2 pc by Q4. Company estimates its gross loss ratio for full FY 25 to be around 2.05
Bajaj Finance started doing non Bajaj Auto related 2W financing in Jun 22. That business has grown to - financing 35k vehicles per month. That means an annual run rate of about 4.2 lakh 2Ws. In FY 24, company did financing for 8.64 lakh 2Ws for Bajaj Auto - which in future won’t happen because of commencement of operations of BACL
Company expects to scale up their 2Ws business to about 7 lakh units by FY 26 ( after the loss of business caused by BACL )
Company believes, every 25 bps cut in Repo rate should improve their NIMs by 10-12 bps. However, company may not take the advantage of repo rate cuts via higher NIMs but via improving / increasing their secured portion of business by growing them at a faster rate
GenAI is helping company improve their operational efficiencies
Rural B2C business is now picking up some pace after growing in single digits for last 6 Qtrs. Company hopes to grow this segment @ 12-14 pc for current FY and accelerate this segment’s growth in next FY
Company did enter a lot of new lines of business in last 2-3 yrs. As these businesses are now maturing, this should give them some operating leverage and help them further improve their Opex to Total Income ratios
Out of the 4000 employees added by the company in Q2, around 2000 have been added in relatively remote geographies. This should help them fuel further growth in under penetrated areas
For full FY, company is forecasting an AUM growth of about 25 pc ( despite the run down of Bajaj Auto’s captive business )
On retail lending front, most of the stress is seen from clients having 3 or more unsecured loans. Company has reduced its exposure to such clients from 13 pc of total clients to about 9 pc now. Also, RBI has been pushing both Banks and NBFCs to reduce their exposure to unsecured lending
New lines of businesses where the company is yet to break even include - New Cars finance, CV finance, Gold Loans, Tractor finance. These new lines of businesses are helping company boost its AUM growth by 2-3 pc from say 23-24 pc to 26-27 pc
Company is seeing strong disbursement growth in their B2C - consumer durables finance business which is up 21 pc in current festive season vs last festive season. In Q1, Q2 - this business had grown disbursements by around 9 pc. Clearly, the festive demand is strong
Disc: holding Bajaj Finserv from lower levels, biased, added recently, not a buy/sell recommendation, posted for educational purposes only