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Prabhudas Lilladher Report
While Bajaj Finance Ltd.'s Q2 FY22 earnings (PAT at Rs 14.8 billion vs PLe: Rs 15.4 billion) missed our estimates on account of elevated collections costs and employee hiring, yet stood healthy on several fronts.
(1) Marked improvement in auto finance NPAs (21% absolute decline QoQ; GNPA % at 16% vs 19% (Q1FY22))
(2) the write-offs at Rs 3.55 billion stood lower than Rs 9 billion (Q1 FY22) and Rs 20 billion (Q4 FY21), Rs23bn (Q3 FY21)
(3) Higher PCR at 55% vs 51% (Q1 FY22) despite improvement in headline GNPA
(4) strong core income with NII up 19% YoY.
BAF stands poised to clock robust return profile (5%+RoA/23%RoE) over FY23-24 predominantly led by
receding credit costs pressures (2.3%/<2% over FY22-24) with anticipated rebound in auto financing, rural B2C and mortgage over Q4 FY22 - Q1 FY23
operating efficiencies to flow with infra/collection/employee costs already baked into current numbers.
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