Motilal Oswal 's research report on Bajaj Finance
Bajaj Finance (BAF)’s 1QFY21 PAT declined ~20% YoY to INR9.6b (8% beat). Other operating income of INR8.6b (v/s est. of INR4.6b) led to PPoP (+25% YoY) beat of 12%. NII and opex were in line with expectations. During the quarter, the company took INR14.5b worth of additional COVID-19 provisions. The total pool of provisions on the morat book now stands at INR29.7b (incl. an ECL provision of INR6.2b) – 14% of morat book and 2.2% of loans. As of June end, ~16% of the consol. AUM was under morat. (INR217b), as against 27% in April (INR386b). The reduction was driven by the Auto, Rural, and SME segments (refer to Exhibit 9). The conversion of term loans into flexi loans led to ~22% (INR36b) of overall decline. GNPA declined 20bp QoQ to 1.4%, aided by high write-off of INR4b. PCR increased 450bp QoQ to 65%.
Outlook
However, due to an increase in provisioning estimates, PAT estimates are largely unchanged. Maintain neutral, with target price of INR3,000 (Unchanged, 4.2x FY22 BV).
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