Q1 Results: Bajaj Finserv Delivers Flat Profit Growth Due To Impairments
Bajaj Finserv subsidiaries were “adversely impacted” by provisions for impairment on holdings of DHFL’s fixed income securities.
Impairments and losses in insurance subsidiaries hurt Bajaj Finserv Ltd.’s profit for the June quarter of 2019-20.
Net profit of the non-bank lender rose 2.4 percent year-on-year to Rs 845.3 crore in Q1. Bajaj Finserv’s subsidiaries—Bajaj Allianz General Insurance Company Ltd. and Bajaj Allianz Life Insurance Company Ltd.—were “adversely impacted” by provisions for impairment on their holdings of Dewan Housing Finance Corporation Ltd.’s fixed income securities, the company said in a regulatory filing on Thursday.
Bajaj Finserv’s Q1 results were also “negatively impacted” by losses from Cyclone Fani, which hit India’s east coast in the June quarter, the statement said. Net profit from its general insurance business fell 28 percent and life insurance business slumped 58 percent to Rs 210 crore and Rs 62 crore, respectively.
Excluding provision for impairment on DHFL, Bajaj Finserv said its consolidated profit after tax would have been Rs 962 crore, an increase of 16 percent. Revenue of the non-banking lender also jumped 39.9 percent to Rs 12,271.7 crore in the June quarter.
Events like Cyclone Fani are one-offs, said Chief Financial Officer S Sreenivasan adding, otherwise the general insurance business is on a “strong wicket.”
He said the provision that the company had to provide against DHFL was also a one-off. Bajaj Finserv has so far provided for 60 percent of its exposure as a way of ‘’abundant caution’’. “We are watching each of the names the company has invested in,” he said.
Bajaj Finserv owns a controlling stake in Bajaj Allianz General Insurance, Bajaj Allianz Life Insurance Company and Bajaj Finance Ltd. Bajaj Finance’s net profit rose 43 percent year-on-year to Rs 1,195.25 crore in Q1, according to its exchange filing. That’s higher than the Rs 1,165-crore estimate of analysts tracked by Bloomberg.
On Thursday, Bajaj Finserv shares fell 3.92 percent to Rs 6,783.00 apiece on the BSE while the benchmark Sensex shed 0.04 percent to end the day at 37,830.98 points.
Watch Sreenivasan’s interaction with BloombergQuint here: