Concall Summary: Bajaj Finance Ltd Q1Fy21

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Business Overview

  • AUM at Rs 138,055 crores, up 7% YoY
  • Opex to NII at 27.9% vs 35% YoY
  • PAT at Rs 962 crores, down 19% YoY
  • Net NPA at 0.5% vs 0.64% YoY
  • Company has reversed interest income to the tune of Rs 220 crores from the interest capitalized during the moratorium period


  • ICICI Prudential Asset Management
  • Oaklane Capital
  • ASK Investment Managers
  • SBI Mutual Fund
  • UTI Mutual Fund
  • ICICI Prudential Mutual Fund
  • Kotak

Concall Highlights

  • Company is operational at 2322 locations; 86 markets representing 15% of overall business are in complete lockdown
  • Bajaj Finance Ltd. (BFL) has restarted home loan and credit card distribution business in June
  • 75+ cities should revert to pre-COVID volumes by October, 40-75 cities by end November, 10-40 cities by January 2021 and top 10 cities by March 2021
  • BFL has booked 1.7 million new loans in the last 50 days
  • Existing customers contributed to 70% of new loans booked during the quarter
  • BFL has acquired 0.53 MM new customers during the quarter
  • The company sold 5.33 lac health card to its existing EMI card customers in Q1FY21 which generated Rs 35 crore fee income
  • The company has converted some of its existing term loan customers with no overdue and good repayment track record to flexi loan for some switch fee. Company has earned Rs 135 crore of switch fee income during the quarter
  • BFL has converted Rs 8,600 crore of term loans into flexi loans
  • Deposits book grew 33% YoY to Rs 20,061 crore. Its contribution to the consolidated balance sheet was 17% as of 30 June 2020. Company has reduced retail deposit rate by 65 bps in two tranches
  • BFL has a liquidity buffer of Rs 20,590 crore and SLR investments of Rs 2,550 crore as on 20th July 2020. The carrying cost of excess liquidity in was Rs 169 crore in Q1
  • Moratorium book has reduced to Rs 21,705 crore (15.7% of AUM) as of 30th June from Rs 38,599 crore (27.1% of AUM) as of 30th April
  • BFL has made additional contingency provision for COVID-19 of Rs 1,450 crores during the quarter taking its contingency provision for COVID-19 to 2,350 crores. Company has made further Rs 623 crores ECL provision for moratorium book taking the provisioning coverage to 13.7% on the consolidated moratorium book
  • The mortgage business is struggling mostly on accounts of pricing pressure
  • Flexi loan products were initially launched in 2013 for loan against property customer and then gradually extended to other customers
  • The bounce rate of each portfolio has dropped 3-4% every month over the three months
  • Markets like Mumbai which is considered open is functioning at 25-30% level
  • BFL has offered flexi loan products to 97-98% to the customers in doctors portfolio and keen to offer 95% of its salaried customer
  • BFL has 15 million wallet customers currently but going forward all its customer will be wallet customer
  • BFL wants to be the top 3 or 4 credit card issuer in the country. The company started acquiring new customers in the month of June and the acquisition rate was 20% of pre-COVID level; aiming 30% in July
  • Collection efficiency has improved by 8-10% in June and further 8-10% will improve in July
  • BFL is expanding the gold loan business at a rapid pace in more than 75 markets; this business is now aggregating net Rs 75-80 crores assets per month. Company is currently offering gold loan in around 400 markets
  • BFL cuts employee salary (5% at the junior level to 17.5% at senior-most level) as in good time employees first but at bad time shareholders first
  • Company has added 2,800 collections officers and approximately 16,000 collection agency staff to manage the increased bounce volumes caused by COVID-19

Image source: Company website

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Karan Sharma

Karan Sharma

The Concall Summary Guy | CFA | Investor
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