Bajaj Finance Stock Analysis|Q2FY21 Results Analysis

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Bajaj Finance Quarterly Results Analysis

Introduction

Bajaj Finance Ltd , leading NBFC in India announced its Q2FY21 results recently. Company’s profits plummeted 36% on YoY basis and AUM remained flat. In this blog, let us analyse the quarterly results of the company

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Bajaj Finance Q2FY21 Results Analysis

Bajaj Finance Q2FY21 result
Bajaj Finance Q2FY21 result
  • Company posted muted AUM growth on QoQ as well as YoY basis. This is mainly as the NBFCs are taking conservative approach in credit underwriting.
  • Interest Income has registered 5% growth on YoY basis, whereas on QoQ basis it is flat.
  • Company’s fee income has reduced drastically on YoY basis.
  • Interest Expenses are lower on account of reduction in interest rates.
  • Overall Net Interest Income (NII) has grown 4% on QoQ basis and it is flat on YoY basis.
  • Company has curtailed its overhead expenses, resulting in lower operating expenses on YoY basis. This has resulted in decent growth in Operating Profit (Pre-provisioning profit) on YoY basis.
  • Company’s provisioning has increased 1.86x from last year mainly to cover the NPAs arising from moratorium period.
  • Such huge provisions have resulted in PBT and PAT declining 35% and 36% on YoY basis respectively.
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Slowest AUM growth in last 14 quarters

AUM growth
Bajaj Finance AUM growth
  • Company has recorded lowest AUM growth in this quarter. The main reason behind this is company is being conservative with its loan portfolio. Currently, company is focusing on maintaining the asset quality rather than growth.
  • Company has mentioned that the its assets under moratorium are in single digits.

Asset Quality, Capital Adequacy and Liquidity Buffer

Asset Quality
Bajaj Finance – Asset Quality
  • Company has maintained its asset quality under control with decreasing NPAs over the period.
Capital Adequacy Ratio (CAR)
Bajaj Finance – Capital Adequacy Ratio (CAR)
  • Company has maintained Capital Adequacy ratio (CAR) at 26.6% which is a very healthy sign.
  • This shows that the company is well capitalized to cover the risky assets.
 Consolidated Liquidity Buffer
Bajaj Finance – Consolidated Liquidity Buffer
  • Consistent Increase in Consolidated Liquidity buffer, which indicates that the company had good liquidity position.

Conclusion

Looking at the current times, it is quite probable that there will be few hiccups in company’s performance. However given the strong brand parentage, trustworthy management and healthy capital adequacy and liquidity, investors should not be worried about the company from long term perspective.



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