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Bajaj Finserv - Q2FY21 First Cut - ICICI Securities

Posted On: 2020-10-21 22:38:17


(CMP - Rs. 5905, MCap - Rs. 93984 crore)

For Bajaj Finserv, AUM growth in lending business remained standstill with elevated provision keeping earnings flat. Premium accretion witnessed continued signs of pick up especially life insurance business witnessing healthy momentum. Insurance business witnessed healthy earnings, though elevated provisioning in lending business impacted consolidated earnings growth.

Q2FY21 Earnings Summary

- Consolidated top-line came at 5.8% YoY to Rs. 15052 crore, lower compared to earlier run rate of double digit, due to moderation in lending business. While insurance business witnessed improvement in earnings, continued provisioning of Rs. 1370 crore in lieu of Covid impacted consolidated earnings reported at Rs. 986 crore, down 18% YoY

- Amid lockdown and risk aversion, AUM growth remained lower at 1% YoY to Rs. 137300 crore. Subsequently, NII growth came at 4% YoY to Rs. 4158 crore. Covid 19 posed risk led to continued build up of contingent provisions of Rs. 1370 crore. Tight control on operating expenses led to 14% YoY growth in operating profit to Rs. 3005 crore. PAT came at Rs. 965 crore, down 36% YoY and flat QoQ. Amid standstill classification, slippages remained muted leading to sequential improvement in GNPA at 1.03% vs 1.4% in Q1FY21

- Gross premium accretion in general insurance declined 3% YoY to Rs. 4156 crore, pick up was witnessed compared to Q1FY21. Crop insurance premium broadly remained flat YoY at Rs. 1759 crore. Thus gross written premium, excluding crop insurance, declined ~6% YoY to Rs. 2397 crore. On the expenses side, claim ratio came lower at 74.2% vs. 75% in Q2FY20. Claim experience remained mixed with high claims in health and property segment partially offset by lower claims in motor own damage. Steady claims coupled with tight control on cost led combined ratio came at 97.4% vs 102.7% in Q2FY20 and 97.6% Q1FY21. Thus, underwriting profit came at Rs. 29 crore. Investment income remained healthy at Rs. 414 crore, leading to 13% YoY growth in earnings at Rs. 332 crore

- Life insurance premium grew 20% YoY to Rs. 2677 crore. Within premium accretion, NBP (new business premium) increased 11% YoY to 1372 crore, led by pick up in individual premium and renewal premium. Individual rated premium grew 19% YoY to Rs. 535 crore, while group premium continued to witness de-growth in premium at Rs. 338 crore vs Rs. 428 crore in Q2FY21 (attributable to lower credit disbursement by banks and NBFC). With payment holiday for premium ending in Q2FY21, renewal premium witnessed an uptick reporting 31% YoY growth to Rs. 1305 crore. However, PAT came lower at Rs. 98 crore vs Rs. 207 crore in Q2FY20, attributable to higher actuarial liabilities. AUM increased 10% YoY to Rs. 64367 crore and Rs. 60968 crore

We would be shortly coming out with a detailed report.

Shares of BAJAJ FINSERV LTD. was last trading in BSE at Rs.5905.9 as compared to the previous close of Rs. 5950.45. The total number of shares traded during the day was 13651 in over 3415 trades.

The stock hit an intraday high of Rs. 6010 and intraday low of 5738.15. The net turnover during the day was Rs. 80620037.


Source: Equity Bulls

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