Growth back at pre-demo levels, says Bajaj Finance
MUMBAI: Markets were slightly disappointed with Bajaj Finance’s numbers with net profit growing 43% to `449 crore in the quarter ended March. Bajaj Finance’s shares fell 1.59% to Rs 1,322 on Wednesday.
Here are the key things we learned from the results of one of India’s fastest-growing consumer finance company.
OUTLOOK
The company wants to grow its balance sheet by 25% in the medium-to long-term. Against its conservative guidance, it has been growing at more than 35%over the last six-seven years. It will move towards the NPA recognition norm of 90 days overdue from first quarter of the current financial year. Over the next three-four quarters, the company plans to make provisions of Rs 40- 50 crore to absorb the demonetisation impact. It is aiming at an RoE of 18-20% and expects gross NPAs to be in the range of 1.50-1.60%.
NO MORE LAP?
Bajaj Finance’s asset quality deteriorated in the March quarter mainly due to two lines of businesses, loan against property and two-wheelers. These two have contributed 35% to gross NPAs. The company’s gross non-performing loans rose 20 basis points to 1.68% from 1.36%, while net NPA rose 10 basis points to 0.44%. LAP portfolio eked out a 1% gain in the quarter but two-wheelers grew 34%. The company has stopped growing its LAP business but continues to write twowheelers business. “We do 100% captive business in two-wheelers, which has higher margins,” said Rajeev Jain, MD, Bajaj Finance.
DEMAND BACK AT PRE-DEMO LEVELS
The company has said demand for almost all segments is back to pre-demonetisation levels. Collections efficiency is also coming back in two-wheelers which was badly hit by demonetisation. The two-wheeler portfolio is Rs 5,000 crore.
Here are the key things we learned from the results of one of India’s fastest-growing consumer finance company.
OUTLOOK
The company wants to grow its balance sheet by 25% in the medium-to long-term. Against its conservative guidance, it has been growing at more than 35%over the last six-seven years. It will move towards the NPA recognition norm of 90 days overdue from first quarter of the current financial year. Over the next three-four quarters, the company plans to make provisions of Rs 40- 50 crore to absorb the demonetisation impact. It is aiming at an RoE of 18-20% and expects gross NPAs to be in the range of 1.50-1.60%.
NO MORE LAP?
Bajaj Finance’s asset quality deteriorated in the March quarter mainly due to two lines of businesses, loan against property and two-wheelers. These two have contributed 35% to gross NPAs. The company’s gross non-performing loans rose 20 basis points to 1.68% from 1.36%, while net NPA rose 10 basis points to 0.44%. LAP portfolio eked out a 1% gain in the quarter but two-wheelers grew 34%. The company has stopped growing its LAP business but continues to write twowheelers business. “We do 100% captive business in two-wheelers, which has higher margins,” said Rajeev Jain, MD, Bajaj Finance.
DEMAND BACK AT PRE-DEMO LEVELS
The company has said demand for almost all segments is back to pre-demonetisation levels. Collections efficiency is also coming back in two-wheelers which was badly hit by demonetisation. The two-wheeler portfolio is Rs 5,000 crore.