Strong results by Bajaj Finance, largely priced inBAJFINANCE - 7391 Change: -35.90 (-0.48 %)
· NII grew 31%YoY to Rs 7000 crore led by strong momentum in AUM growth. Net Profit surged 88% YoY and 7%QoQ to Rs 2781 crore.
· AUM growth traction continues with 31% YoY surge to Rs 2,18,566 crore vs. It was up 7% QoQ which was primarily driven by 31% YoY and 7% QoQ growth in Consumer B2C finance and surge in SME lending. Mortgage also picked up with 31% YoY growth and 8.3% QoQ to Rs 71092 crore. BHFL (HFC) AUM stood at |61191 crore, included in above.
· Provisions for Q2FY23 declined further to Rs 734 crore from Rs 757 crore, mainly due to improvement in asset quality. GNPA & NNPA stood at 1.17% and 0.44% as of Q2FY23 as against 1.25% and 0.50% as of Q1FY23. The Company continues to hold a management overlay of Rs 1,000 crore. It has 62% coverage ratio on stage 1 assets and 120bps on stage 2&3 assets.
· In line with guidance C/I ratio was stable QoQ at 35.9%. With the deep investments being committed to Omni channel strategy (geo-expansion, app platform, web platform), the Company expects Opex to NII to remain elevated at 35-36% for FY23
· The Company added 2.61 mn new customers to its franchise in Q2. Customer franchise stood at 62.91 mn as of Q2FY23. It booked 6.76 mn new loans as against 7.4 mn in Q2FY23, slightly lower in number but ticket size moved up. The Company is comfortable adding 9-10mn new customers in FY23.
The results are largely inline with expectations. We believe, though recent performance is priced in the stock, the continued AUM momentum sets the stage for strong profit growth and sustainable return ratios over the medium term. We remain bullish on Bajaj Finance future performance.