Almost zero activity in this thread for 3 years, strange.
I am pretty confident about the emerging business like Bajaj Health and AMC, and Bajaj Finance to return to it’s older valuations.
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Bajaj Finserv -
Q2 results and concall highlights -
Bajaj finserv’s stake in various group companies -
Bajaj Finance - 51 pc
Bajaj Allianz General Insurance - 74 pc
Bajaj Allianz Life Insurance - 74 pc
Bajaj Finserv Direct - 80 pc ( digital marketplace and technology services )
Bajaj Finserv Health - 100 pc ( health tech platform - offering third party services )
Bajaj Finserv AMC - 100 pc ( have launched their MFs )
Bajaj Finance further holds 88 pc in Bajaj Housing, 100 pc in Bajaj Financial Securities ( digital stockbroking )
Group’s branch network -
Bajaj Finance - 2.15 lakh touch points
Bajaj Hosuing - 216 branches
Bajaj Allianz General Insurance - 218 branches
Bajaj Allianz Life Insurance - 562 branches
Contribution in Q2 PAT from various subsidiaries -
Bajaj Finance - 2053 cr, up 10 pc
Bajaj General Insurance - 340 cr, up 20 pc
Bajaj Life Insurance - 41 cr, down 65 pc
Others ( Bajaj Direct, AMC, Health etc ) - (-) 90 cr
Bajaj Finserv standalone - 908 cr
Intercompany adjustments - (-) 1165 cr
BAGIC - Q2 highlights -
GWP @ 5871 vs 7298 cr, down 20 pc
GWP ( excluding crop and Govt health ) - 4157 vs 3747 cr, up 11 pc
Combined ratio - 101.4 vs 95.3 pc
Underwriting profits - (-) 48 vs 37 cr
PAT - 494 vs 468 cr
AUM @ 31.9 k cr, up 8 pc YoY
Realised investment returns @ 9.34 pc
Breakup of AUM - Bonds:Equity:G-Sec - 34:16:50
Business Mix of BAGIC -
Motor - 28 vs 25 pc
Retail health - 5 vs 4 pc
Group health - 20 vs 14 pc
Property, Liability and Engineering - 20 vs 17 pc
Agri - 9 vs 11 pc
Govt Health - 8 vs 21 pc
Others - 9 vs 8 pc
BALIC - Q2 highlights -
Individual NB - 1895 cr, up 34 pc
Retail Protection NB - 84 cr, up 40 pc
Group Protection NB - 609 cr, up 40 pc
Renewal Premium - 3342 cr, up 33 pc
GWP - 6544 cr, up 23 pc
PAT - 148 cr, down 23 pc
AUM - 1.23 lakh cr, up 25 pc
Solvency ratio - 378 vs 466 pc
Product Mix -
Individual Par - 24 pc
Individual Non Par savings - 28 pc
Individual Non Par protection - 5 pc
Individual Annuity - 6 pc
Individual ULIP - 37 pc
Breakdown of AUM -
Corporate Bonds - 27 pc
G Secs - 53 pc
Equity - 14 pc
Others - 6 pc
Persistency ratios -
13th month - 85 vs 83 pc
25th month - 72 vs 73 pc
37th month - 65 vs 66 pc
49th month - 63 vs 62 pc
61st month - 52 vs 50 pc
Bajaj Finance Q2 highlights -
AUM @ 3.73 vs 2.90 lakh cr, up 29 pc
No of customers @ 9.21 vs 7.66 cr, up 20 pc
Total Income - 10946 vs 8847 cr, up 24 pc
NII @ 8838 cr, up 23 pc
Loan losses and provisions in Q2 @ 1909 vs 1077 cr - up sharply YoY. Net increase in stage 2 and stage 3 assets @ 542 cr vs LY. The stress is seen across retail and SME lines of businesses
PAT - 4014 vs 3551 cr, up 13 pc
GNPAs - 1.06 vs 0.91 pc
NNPAs - 0.46 vs 0.31 pc
Concall Notes -
The fall in GWP in the BAGIC is due to spill over of a large Govt order for group health insurance from Q2 to Q3
Combined ratio is elevated in Q2 vs LY due to the claims arising because of natural calamities. Company expects combined ratio to fall significantly in Q3, Q4
BALIC’s mkt share in Pvt life Insurance has grown from 8 pc to 9 pc over last 1 yr. BAGIC’s mkt share among private players is now @ 6th
Bajaj Finserv Health Ltd is an aggregator of various Doctors, Clinics, Labs, Pharmacies and Hospitals. In Q1 , they also acquired Vidal Health. Vidal Health is one of India’s largest third party health insurance claim processor. The acquisition costed them 325 cr. Vidal is already servicing health insurance claims of about 13 cr ppl across India. The integration process is on for both the companies. As a healthcare startup, ( Bajaj Health + Vidal ), they generated a revenue of 233 cr for Q2 which is an encouraging sign
The stress in general insurance business is coming from 2 segments ( industry wide ). First - Slowdown in new CV sales + no hike in third party premium rates in last 3 yrs. Second, in retail health insurance due medical inflation and increased incidence of disease. Hence the company has decided to go slow on these 2 segments - for the moment. As the situation changes, they ll change their stance. They keep evaluating and re-evaluating continuously and keep deciding thereof
Heath vs Motor OD insurance - there r 2 critical differences. As u age, the cost of health insurance keeps going up vs falling cost of insurance for an old car. The medical inflation in health insurance space is always higher than repair inflation in motor insurance. Plus in Health Insurance, company can’t say no to a customer renewal whereas in a motor Insurance, company can do that. One has to be very careful in building their book in Health Insurance. Hence, the profitability in health insurance is mostly lower vs Motor OD insurance.
BALIC is a turnaround case. They r committed to moving their VNB margins higher. They have already moved from single digits to mid teens. They r keen to get into the top tier as soon as possible
BALIC has now become the third largest company in private sector in terms of number of policies sold. So, they r already punching above their weight here. They now need to start upselling
BALIC was in the investment phase for last 7-8 yrs, setting up new verticals of distribution, tieing up with new Banks, partners, distributors etc. Now most of that is behind them. Now they r concentrating on improving the productivity of various channels / verticals. They do foresee costs ( as a percentage ) coming down and profitability improving - going forward
Q3,Q4 are always better for life Insurance business vs Q1,Q2. They r expecting BALIC’s margins to move up in H2
Looking to invest another 500 cr combined into the Bajaj Finserv AMC and Bajaj Finserv Health business
Disc: holding from lower levels, biased, added recently, not SEBI registered, not a buy/sell recommendation
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