In Line Quarter For Bajaj Finance Driven By Healthy AUM Growth

Bajaj Finance Ltd.’s profit grew 46 percent for the July-September quarter of financial year 2016-17, in-line with the Bloomberg consensus estimate of Rs 406.7 crore.

Profit grew to Rs 408 crore from Rs 279.39 crore for the corresponding quarter in the previous year, according to the company’s filing on the Bombay Stock Exchange.

Total income from operations grew 39.7 percent to Rs 2,347 crore compared to Rs 1,680 crore clocked in the same quarter last year led by healthy 38 percent growth in assets under management (AUM) in the same period.

The non-banking finance company’s AUM has been growing at above 30 percent for more than 20 quarters, and it crossed the Rs 50,000 crore mark this quarter.

There was a marginal uptick in gross non-performing assets, which came in at 1.58 percent compared to 1.4 percent in the quarter-ended June. Incremental gross NPAs came from self-employed home loans business, Mr. Rajeev Jain, MD, Bajaj Finance in a conference call with analysts.

Net non-performing assets were broadly stable at 0.43 percent. Provisions for the quarter fell by 5.9 percent to Rs 169.1 crore on a quarter-on-quarter basis. The company had made an additional provision of Rs 19 crore in its mortgage portfolio in the previous quarter.

However, the company remains adequately capitalised for the next six quarters, said Mr. Rajeev Jain. Its Tier-I capital ratio for the quarter at 15.0 percent as compared to 14.81 percent in the June ended quarter. The company had raised Rs 1,955 crore by way of Tier-II capital to augment its capital base.

Segmental Performance

• Consumer assets under management grew 52 percent from the same quarter last year to Rs 23,892 crore.
• Small and medium enterprise assets under management grew 14 percent year-on-year to Rs 20,369 crore.
• Commercial assets under management grew 61 percent to Rs 6,123 crore compared to Rs 3,792 crore on a yearly basis.
• Rural assets under management grew 194.7 percent year-on-year to Rs 1,948 crore.

The board approved raising of funds via debentures.

Highlights From The Conference Call

• The company saw incremental cost of funds drop strongly during the quarter, lifting margins.
• The rural consumer lending business picked up in the second quarter after the slowdown in the previous quarter.
• The company has actively pared back lending in the MSME rural business.
• The company has made some changes in its consumer durables portfolio after seeing some weakness in asset quality. The management expects the segment to return to a growth path in the next 4-5 months.
• The performance of the new consumer retail businesses like lifestyle financing and e-commerce financing was in line with expectations.
• The company is working on plans to launch an e-wallet.