ValuePickr Forum

Bajaj Finance Limited

But share is not responding.
Can anybody post the detailed veiw.

some issues on the NPA part, but the management says have changed provision days.

overall gud set of numbers.

Visited some digital stores, could see bajaj finance offers being presented with every product.

Rajeev Jain - CEO of the company addressed the call:Highlights by Capital Mkt
The company continued to record robust volume & cross sells momentum and strong credit performance across Consumer & SME businesses despite a weak demand environment.Assets Under Management of the company increased 32% to Rs 35,557 crore at end June 2015. AUM growth is expected to continue to remain healthy, going forward.Gross NPA and Net NPA as of 30 June 2015 stood at 1.69% and 0.55% respectively. The provisioning coverage ratio stood at 68% as of 30 June 2015.During the quarter ended 30 June 2015, as required by RBI guidelines, the Company has moved its NPA recognition policy from 180 days over-dues to 150 days over-dues. The comparable 180 day Gross NPA & Net NPA stood at 1.54% and 0.48% respectively.The Company continues to provide for loan losses in excess of RBI requirements. Loan losses and provisions moved up 24% to Rs 103 crore in Q1FY2016 as against Rs 83 crore in Q1FY2015.
As per the company, the GNPA would be 2% and NNPA 0.7% after applying 90 days over-dues NPA recognition norms. As the company continues to make excess provisions, the provision impact would be negligible on shifting to 90 days over dues NPA recognition norms from current 150 days over dues.The company is now growing its Salaried Home Loans business by refining the business model with Direct to Customer acquisition model to build a profitable growth engine.Customers acquisition surged 37% to 17.19 lakh in Q1FY2016 from 12.52 lakh in Q1FY2015.Return on Assets and Return on Equity were 0.9% and 4.9% (not annualized), respectively for Q1FY2016.
Capital adequacy ratio (including Tier-II capital) stood at 20.72%. The tier I capital stood at 17.41%. The Company continues to be well capitalized to support its growth trajectory.Consumer durable business had a good quarter disbursing 12.9 lakh accounts (up 31%) in Q1FY2016, despite a degrowth in industry sales.Digital finance business delivered decent growth despite intense competitive activity from E-Commerce players. The business continued to deepen relationships with leading manufacturers like Samsung and Apple.Lifestyle finance business disbursed 28 thousand accounts, registering a growth of 92% YoY. The growth in the business was driven by deepening relationships in large corporate accounts as well as extensive distribution expansion during the quarter. The company has created a financing model for extending credit to clients buying from un-organized retail market which contributes to 90% of the furniture market, which is expected to help to grow this business into much larger business in next 2-3 years.
Salaried personal loans business delivered its highest ever disbursement of Rs 636 crore in a quarter registering a growth of 114% over the corresponding quarter of last year. The business continues to deliver a healthy credit performance.E-Commerce financing business was launched in the previous quarter with successful tie-up with Flipkart for ‘Seller Finance’. The business disbursed Rs 3.96 crore across 15 sellers of Flipkart. The business is working to launch its ‘Consumer Finance’ program with select E-Commerce companies in the Jul-Sept 2015 quarter. The business is also engaging with online retailers like Snapdeal & Amazon to expand its E-Commerce franchise.Cross-sell momentum across Lending and Fee products remained strong.
Rural lending consumer business continued its excellent momentum in first quarter of 2015-16 aided by strong volume traction in its consumer durable business. The business launched 15 new Branches across the states of Karnataka, Gujarat and Maharashtra during the quarter. With the launch of MSME business during this quarter, the Rural Lending vertical now has a highly diversified product portfolio, offering over 12 products. The business is ready to further expand its rural footprint into the state of Madhya Pradesh in Q2.Business loans had a strong quarter disbursing Rs 832 crore with a growth of 44% in Q1FY2016.Professional loans continued to grow very well and disbursed Rs 235 crore with a growth of 122% in Q1.LAP business remained in hyper competitive situation as all lenders want to grow this asset class. Loan against Shares (LAS) business had a decent quarter.
Commercial Infra business remained in pause mode due to sectoral stress. Commercial Lending business expanded its offerings in the mid-market client segment through launch of Structured Finance and identified 02 new industry verticals of FIG & Light Engineering to expand the industry coverage in commercial lending vertical.
The ‘Auto Component Finance’ business continued to grow well.The company launched 02 new Relationship Management channels viz. ‘Digital Lounge’ and ‘IFA’ and rehashed its ‘RM’ business channel strategy, as part of its Wealth & Relationship Management strategy.
Fixed deposits business garnered Rs 144 crore of deposits during the quarter, taking the total deposit book to Rs 1119 crore. Average deposit size increased to above Rs 3.7 lakh during the quarter with average tenor of above 30 months.Interest cost for the company continues to remain significantly lower amongst NBFC peers. Borrowing mix of the company at the quarter end between banks, money markets and retail deposits was 47:49:04.

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Sanjeev bajaj interview

http://economictimes.indiatimes.com/news/company/corporate-trends/how-sanjiv-bajaj-has-created-financial-services-supermarket/articleshow/49249643.cms

Bajaj finance got a nod to set up a housing finance Company as a wholly owned subsidairy

Rajeev Jain - CEO of the company addressed the call:Highlights by Capital Mkt
Assets Under Management (AUM) surged 36% to Rs 37964 crore at end September 2015 from Rs 28004 crore at end September 2014. Deployments jumped 51% to Rs 9236 crore in Q2FY2016 from Rs 6115 crore in Q2FY2015.The company is targeting an AUM (loans) growth of 20-25% for FY2016, while expects the growth to be higher at 35%, if the festive loan demand turns out to be strong.New loans acquired galloped 42% to 13,93,309 in Q2FY2016 from 9,78,174 in Q2FY2015.Loan losses and provisions increased 71% to Rs 137 crore Q2FY2016 as against Rs 80 crore in Q2FY2015. The company made accelerated provisioning of Rs 31 crore in Q2FY16. Adjusted for this, loan losses and provisions growth is 33%.
Return on Assets and Return on Equity for Q2FY16 were 0.8% and 4.2% (not annualized) respectively. ROE is adjusted for capital raised by the company through QIP issue of Rs 1400 crore during Q1FY16.
Gross NPA and Net NPA as of 30 September 2015 stood at 1.67% and 0.46% respectively. The provisioning coverage ratio (PCR) stood at 73% as of 30 September 2015. Net NPA & provisioning coverage ratios have shown improvement from 0.48% and 67% respectively a year ago.Capital adequacy ratio (including Tier-II capital) stood at 20.49%. The tier I capital stood at 17.32%. The Company continues to be well capitalized to support its growth trajectory.
Two Wheeler financing business disbursed 139K accounts in the quarter (11% YoY). Three Wheeler financing business disbursed 8K accounts in the quarter (21% YoY). Consumer Durable business had a strong quarter disbursing 908 K accounts (36% YoY).Existing customer penetration continued to remain strong. The business launched its first co brand EMI Card proposition with Vijay Sales the second largest retailer in India.
Retailer finance business & extended warranty cross sell for consumer durable business remained strong, disbursing Rs 930 crore (83% YoY) and 45 crore. Extended warranty volume penetration crossed 16% in September 2015 from a low of 7.5% in the previous year.
Digital product finance business disbursed 126K accounts (102% YoY) during the quarter. Business crossed 50K accounts for the first time in the month of August 2015. Business is also exploring partnership opportunities with wireless carriers for financing packaged products.
Lifestyle finance business disbursed 38k accounts (92% YoY). The business continues to focus on identifying new categories like mattresses etc. New category additions should help the business accelerate growth in second half.
Salaried personal loans continued its strong run during the quarter and disbursed Rs 715 crore (88% YoY). The medium term strategy for the business is to grow direct business and deepen geographic penetration. Business added 15 new locations during the quarter to deepen its geographic footprint.Salaried home loans disbursed Rs 246 crore (119% YoY). The business launched Developer Finance product during the quarter. HFC license is expected further augment the delivery of its strategy.E-Commerce finance business launched in June 2015 with a ‘Seller Finance’ offering for sellers of Flipkart and Snapdeal disbursed Rs 49 crore across more than 140 sellers in Q2.
Rural lending business continued to be the fastest growing business in Q2 as well, disbursing Rs 361 crore (284% YoY). The business added 18 new branches across states of Madhya Pradesh, Karnataka, Maharashtra and Gujarat during the quarter. The business is now present in 272 towns and villages in less than 3 years of its launch. The diversified business model pursued has delivered rich dividends.Retail construction equipment finance business now has receivables of less than Rs 90 crore. This business had 1,100 crore of receivables at its peak. Due to timely exit from the business, the company has managed to come out with no capital loss over the 5 years of this business. Incremental provisions are expected to be non-material and the business is expected to fully wind down in the next 9 months time.
Loan against Share business had a good quarter with a net assets addition of Rs 159 crore (80% YoY) catalyzed by growth in its retail segment.
Structured Finance, Financial Institutions (FIG) lending business & Light Engineering Vendor Financing business are beginning to grow well and disbursed Rs 310 crore in Q2 (Rs 195 crore in Structured Finance, Rs 105 crore in FIG & Rs 10 crore in Light Engineering).
Relationship management (RM) strategy launched this year has started to deliver on growth momentum. RM business disbursed Rs 376 crore in Q2 (61% YoY).
Fixed deposit business garnered Rs 413 crore of new fixed deposits during the quarter taking the total deposit book to Rs 1467 crore (233% YoY). The average deposit amount stood at 3.3 lakh with a weighted tenor of greater than 24 months.
Interest cost for the company continues to remain significantly lower amongst its NBFC peers. Borrowing mix at the quarter end stood at 47:48:05 between banks, money markets and retail deposits respectively.

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Bajaj finance should be a growth story for next 10 years. There is a huge market which is still untapped.
I hope the management doesn’t scarifies the credit quality for the growth. Company reported compounded revenue growth of 43% in last 10 years (same in last 5 years). Should not be difficult for a company to grow 20% for next 5 to 10 years

disclosure: invested …2.5 beggar

What a rally in the stock price…even in the face if Tax Notice…SMILING AWAY TO THE BANK!!!

HELP HELP…! Bajaj Finance one of the top investment in my portfolio is now 3 begar.!
Stock at current market price 6300/- trades at P/B of 7x and P/E of 32x.
Best in industry - NPA 0.5 , ROA 3%, ROE 20%

I always struggle in determining fair valuation for banks and NBFC’s? With P/E ratio, stock looks at comfortable level but with 7x P/B, it looks very expensive.

Please help me out here.

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Why worry, if the fundamentals and the growth story is still intact.

Enjoy the party.

Disc. : Invested.

Bajaj Finance gets Tax 309 Cr tax notice for 0% scheme. Source: DNA India news

Is it worth to sell this stock (as it is very expensive now and risk to reward doesn’t look good) and invest in other beaten down good quality companies? Do we ever had any NBFC’s selling at P/B of almost 7??? (Other than Gruh)

With P/E of 30, it still looks reasonable valuations. Please advise

Does anyone really understand Price to Book? I think the market values this stock on a PE basis rather than on a PB basis.

@pumba22

Bajaj Finance is a strong company with unparalleled moat in scale and opportunity in Consumer Durable Sector! If you look at the economy although many manufacturing indices are falling what is growing is the Services sector and employment growth rates and company hikes which works strongly for Bajaj Finance! It is a indirect play on consumer durables sector!

It can be a good PF stock for 10-15 years, as long you buy it at right price! Buy it @5000 and hold it with conviction , it wont dissapoint you and should beat the FD returns!

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@vistag

Very nicely put. Yes, it is a stock, worth holding for the long term.

With 10 years down the line from today., it hardly matters if we bought the stock at Rs. 5000 or Rs. 6000.

Its an excellent management with strong business moats.

Discl : Invested

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potential to become the GE capital of india.gr8 results,invested

This company is going crazy. Super duper performance.
Disc- Invested

CONFERENCE CALL

Bajaj Finance

Expects RoE at around 20% for FY2016, despite capital raising

Bajaj Finance conducted a conference call on 03 February 2016 to discuss its financial results for the quarter ended December 2015. Rajeev Jain - CEO of the company addressed the call:
Highlights:

The company has posted strong 58% surge in the net profit to Rs 408 crore in Q3 FY16. The company, for the first time, added above 2 million customers in single quarter. The company has recorded strong 40% surge in the new loans acquired to 21,39,041 in Q3FY2016 from 15,31,580 in Q3FY2015.

Assets Under Management jumped 41% to Rs 43452 crore at end December 2015 from Rs 30822 crore at end December 2014, driven by sharp 67% surge in the deployments to Rs 14625 crore in Q3FY2016 from Rs 8757 crore Q3FY2015.

The company maintains the AUM growth target of 25%, which is consistently overachieved.

The company expects to achieve RoEs of 20% in FY2016, despite capital raising of Rs 1400 crore.

The company do not expect any equity capital raising for next two to two-and-half year. As per the company, the Tier II capital raising and strong RoEs would support the capital base of the company.

GNPA ratio declinied ti 1.29%, while NNPA ratio eased to 0.26% at end December 2015, as the Company sold NPA receivables of Rs 82 crore worth in Mortgage business on cash basis.This has helped improve LAP & Self employed HL portfolio metrics.

Loan losses and provisions moved up 35% to Rs 146 crore in Q3FY2016. The company has raised provisioning coverage ratio (PCR) to 80% at end December 2015, which is marginally short of the peak of 83%.

Infra financing business continues to remain in pause mode due to sectoral stress. The outstanding portfolio is now down to 312 crore comprising of 5 accounts. One account was fully provisioned in Q3FY2016, while rest of the accounts are well performing account. The company plans to sell the stressed infra account in Q4FY2016.

Rural lending business continued to grow well disbursing Rs 624 crore (up 271% yoy) in Q3FY2016. The business added spokes to existing branches across states of Madhya Pradesh, Karnataka, Maharashtra and Gujarat during the quarter. The business is now present in 326 towns and villages in less than 3 years of its launch. The business is well on track to launch its branches in Rajasthan in Q4FY2016.

The company proposes to improve the share of rural lending business from current 2.5% of balance to 5-6% in FY2017 and 8-9% in next three years. The company also proposes to raise the share of commercial business to 15-16% in next three years from present 11%.

AUM mix is likely to be Consumer lending at 30-35%, SME lending at 40-45%, Commercial lending at 13-14%, and Rural lending at 7-8%

Two and Three wheeler financing business disbursed Rs 971 crore up 21% yoy in Q3FY2016. Two Wheeler financing business disbursed 177K accounts (up 11% yoy), while three Wheeler financing business disbursed 8.5K accounts (up 47% yoy) in Q3FY2016.

Consumer Durable business disbursed 14.59 lac accounts (30% jump yoy) on account of a strong festive season. EMI card franchise crossed 5.1 million cards in force.

Retailer finance business for consumer durable business remained strong, disbursing Rs 1753 crore (98% YoY).

Digital product finance business disbursed 178 K accounts (76% YoY) during the quarter. ‘Digital Activate’ an online to offline partnership model with retailers, has been launched in Q3FY2016, which is expected to deliver higher growth in next fiscal.

Lifestyle finance business disbursed 50.4 K accounts (122% YoY). Furniture remains the largest lifestyle finance category.

Salaried personal loans disbursal stood at 727 crore (51% YoY). ‘Direct to Customer’ contribution in Q3FY2016 increased to 54% from 50% in Q2FY2016 as part of the strategy to grow direct business. Business is expanding its geographical footprint to 15 new locations in Q4FY2016.

Salaried home loans disbursed 330 crore (112% YoY) in Q3FY2016. The company expects to launch 4th digital property in the next fiscal.

E-Commerce seller finance business disbursed Rs 82.6 crore in Q3 across 160+ sellers of Flipkart and Snapdeal.

Personal loan cross sell business disbursed Rs 802 crore in Q3 (63% YoY).

MSME rural business disbursed Rs 67 crore in Q3 is yet to stabilize given first year of its launch.

Business Loans had a strong quarter disbursing Rs 1266 crore (70% YoY). Portfolio performance continues to hold well across all parameters.

Professional Loans continued to grow well and disbursed Rs 310 crore (93% YoY).

Loan against property business continued to remain in hyper competitive state. The business disbursed Rs 1213 crore in Q3 (1% YoY).

LAP business has transitioned to 100% Direct to Customer in order to build a low cost & sustainable ROE business. As part of the Direct to Customer strategy, Bajaj

Finance henceforth, will only sell to its large existing customer franchise. Business is expected to de-grow during this transition but it should deliver growth from next fiscal.

Self-employed home loan business disbursed Rs 459 crore in Q3 (de-growth of 20% YOY), on account of transition to a 100% D2C model.

LAS business had a very good quarter with a net AR addition of 602 crore catalyzed by growth in its retail segment.

Auto component financing businesses continued to grow well in this quarter with a net AR addition of 150 crore.

Corporate Finance Business are beginning to grow well and disbursed Rs 248 crore in Q3FY2016.

Relationship management business disbursed Rs 537 crore (103% YoY).

Fixed deposit business garnered Rs 672 crore of new fixed deposits in Q3FY2016 taking the total deposit book to Rs 2038 crore (218% YoY). The average deposit size stood at 3.3 lakh with a weighted tenor of 25 months. Fixed Deposit now contributes to 5.9% of total borrowings.

Interest cost for the company continues to remain significantly lower amongst its NBFC peers. Borrowing mix at the quarter end stood at 47:47:06 between banks, money markets and retail deposits respectively. However, the company is concerned about cost of funds in Q4FY2016 due to tight liquidity conditions.

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Thanks Vishnu for the wonderful update.