Bajaj Finserv - Q1FY21 Result Update - ICICI Securities

Bajaj Finserv reported steady traction in its lending business. Slower premium accretion in insurance got offset by strong investment gains. Higher topline coupled with lower claims & cost control led earnings. Consolidated topline came in at 15.6% YoY to Rs. 14192 crore, primarily led by a healthy performance in lending business & strong investment income in insurance business. Lending arm Bajaj Finance made a contingent provision of Rs. 1450 crore amid Covid-19 though lower opex in lending business and fall in claims led to 13.8% YoY increase in consolidated PBT to Rs. 2568 crore. Hence, consolidated PAT was at Rs. 1215 crore, up 43.7% YoY.

Valuation & Outlook

Improvement in moratorium book stayed the main highlight during the quarter. Strategy to focus on selective pocket for growth, tight control on cost and improve collection bodes well in a changed environment. However, anticipation of increase in credit cost, slower business growth is seen keeping earnings momentum benign. Hike in premium rates for protection products would stabilise business growth, margins. Accretion in annuity, guaranteed products are seen keeping margins steady ahead. Higher acceptance of health insurance bodes well for premium accretion ahead, though revival in claims as economy attains normalcy is seen stabilising underwriting profitability in general insurance business. The management's continued focus on staying profitable on underwriting basis rather than investment income gives confidence. Given persisting uncertainty, we broadly maintain our estimates with earnings expected to grow at ~18.7% CAGR in FY21-22E. We maintain HOLD with a revised TP of Rs. 6400, based on SOTP valuation, implying multiple of ~21x FY22E consolidated earnings.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_BajajFinserv_Q1FY21.pdf

Shares of BAJAJ FINSERV LTD. was last trading in BSE at Rs.6390 as compared to the previous close of Rs. 6349.65. The total number of shares traded during the day was 47700 in over 8928 trades.

The stock hit an intraday high of Rs. 6450.05 and intraday low of 6320. The net turnover during the day was Rs. 304760281.

Source : Equity Bulls

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