ICICI Direct: Bajaj Finserv’s One-Offs Impact Q1 Earnings; Uncertain Outlook

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..ICICI Direct Report.Bajaj Finserv Ltd. reported steady traction in its lending business. Slower premium accretion in insurance got offset by strong investment gains. Higher topline coupled with lower claims and cost control led earnings. Consolidated topline came in at 15.6% YoY to Rs 14,192 crore, primarily led by a healthy performance in lending business and strong investment income in insurance business.Lending arm Bajaj Finance made a contingent provision of Rs 1,450 crore amid Covid-19 though lower opex in lending business and fall in claims led to 13.8% YoY increase in consolidated profit before tax to Rs 2,568 crore. Hence, consolidated profit after tax was at Rs 1,215 crore, up 43.7% YoY.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 approximately 18.7% compound annual growth rate in FY21-22E.We maintain Hold with a revised target price of Rs 6400, based on sum of the parts valuation, implying multiple of approximately 21 times FY22E consolidated earnings..Click on the attachment to read the full report:.DISCLAIMERThis report is authored by an external party. BloombergQuint does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the brokerage and do not represent the views of BloombergQuint..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

ICICI Direct: Bajaj Finserv’s One-Offs Impact Q1 Earnings; Uncertain Outlook

ICICI Direct: Bajaj Finserv’s One Offs Impact Q1 Earnings; Uncertain Outlook

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