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Bajaj Finance: Q3 FY22 Results

24 May 2022

Private lender Bajaj Finance released its earnings report for Q3 FY22 on January 18, 2022. In the quarter that ended on December 31, 2021, the company reported a whopping 85% year-on-year (YoY) increase in its profit after tax (PAT) to Rs 2,125 crore from Rs 1,146 crore in the year-ago period. On a quarter-on-quarter (QoQ) basis, Bajaj Finance’s PAT grew to Rs 2,125 crore from Rs 1,481 crore.

The company’s total income saw a 28% jump to Rs 8,535 crore in Q3 FY22 against the reported Rs 6,659 crore in Q3 FY21. This comes against the previous quarter’s (Q2 FY22) Rs 7,732 crore. 

The lender reported a 40% YoY increase in its Net Interest Income (NII) at Rs 6,000 crore in the quarter under review from Rs 4,296 in the year-ago period. Interest income reversal for the quarter was Rs 241 crore as compared to Rs 450 crore in Q3 FY21.

The NBFC was able to add 74 lakh new loans in Q3 FY22 against 60 lakh new loans in Q3 FY21. More importantly, Bajaj Finance’s Assets Under Management (AUM) stood at Rs 1.81 lakh crore after a 26% YoY jump from Rs 1.43 lakh crore in the year-ago period.

The stock of Bajaj Finance closed in the red at Rs 7,744.00 per share after taking a 1.38% dip on its quarterly earnings report at the end of the intraday trading session on January 18, 2022.

Hits:

  • PAT increased 85% YoY to Rs 2,125 crore from Rs 1,146 crore in the year-ago period
  • Total income jumped 28% to Rs 8,535 crore against Rs 6,659 crore in Q3 FY21
  • Loan losses and provisions for Q3 were at Rs 1,051 crore against Rs 1,352 crore in Q3 FY21
  • Gross NPA at 1.73% against 2.45% in Q2 FY22
  • Net NPA at 0.78% against 1.10% in Q2 FY22
  • Capital adequacy ratio (CAR) was 26.96%
  • RoE up at 5.3% YoY from 3.3%
  • Customer franchise stood at 5.5 crore against 4.6 crore

Misses:

  • Net NPA up at 0.78% from 0.19% in Q3 FY21
  • Interest income reversal for Q3 FY22 was ₹ 241 crore

What the Management says

The company management says that it has been 15 months since we started phase 1 of the business transformation project. Due to wave 2, it got delayed by 3 months. Phase 1 of the digital platform has now gone live with a staggered release methodology. The Company plans to transition all consumers to the new digital platform from February onwards. During the quarter, the Company changed its NPA classification criteria from number of EMI outstanding to Days Past Due approach in line with the RBI circular. It also added that this change did not have any negative impact on the Company’s NPA.

Other things to know about Bajaj Finance

  • The company has written off principal outstanding of Rs 213.35 crore and Rs 681.18 crore for the quarter.
  • Corresponding interest outstanding (including capitalized interest) of Rs 49.37 crore has also been written off by utilizing the available expected credit loss (EGL) provision including management overlay.
  • The Bajaj Group holds management and macro-economic overlay of ~Rs 1,083 crore as at 31 December 2021.
  • Bajaj Finance has the largest market cap in the consumer finance sector at Rs 4.73 lakh crore. 
  • Bajaj Finance’s P/E ratio is at 10.7.05 while its P/B ratio is at 12.82, both of which are highest in the sector. 

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