Bajaj Finserv has reported a 44 percent year-on-year jump in Q1 FY21 consolidated net profit at Rs 1,215 crore.
The share price of Bajaj Finserv jumped almost 4 percent while those of Bajaj Finance fell 3 percent in the morning trade on BSE on July 22, a day after the two companies announced their June quarter results.
Bajaj Finserv reported a nearly 44 percent year-on-year (YoY) jump in Q1 FY21 consolidated net profit at Rs 1,215 crore. On a quarter-on-quarter (QoQ) basis, profit jumped over six times.
Consolidated total income for the quarter under review stood at Rs 14,192 crore, up 16 percent YoY. On a QoQ basis, income was down 7 percent.
However, the company's arm Bajaj Finance's consolidated profit after tax dropped 19 percent YoY to Rs 962 crore. Total income for Q1 FY21 increased 14 percent to Rs 6,650 crore.
Bajaj Finance made a pre-tax provision of Rs 1,450 crore in the form of contingency provision during Q1 FY21 on account of the impact of COVID-19.
"The same is over and above the provision of Rs 900 crore in FY20 and other usual and necessary provisions for non-performing assets (NPAs)," Bajaj Finserv said.
Assets under management (AUM) of Bajaj Finance, as of June 30, stood at Rs 1,38,055 crore, an increase of 7 percent YoY. "This includes an AUM of Rs 32,982 crore for its housing finance subsidiary, Bajaj Housing Finance, a 52 percent growth YoY," the company said.
Brokerage firm Motilal Oswal Financial Services has a 'neutral' call on Bajaj Finance with a target price of Rs 3,000.
Motilal said Bajaj Finance reported a largely in-line quarter, barring the surprise on fee income and MTM gains.
"We have upgraded fees and other income estimates by ~20%, leading to a PPoP upgrade of 3–4 percent. However, due to an increase in provisioning estimates, PAT estimates are largely unchanged," Motilal said.
The company has guided for continued cost rationalisation and focus on fees in the near-term to navigate earnings pressure.
"AUM growth is likely to be 10–12 percent for FY21 and provisioning expenses would be Rs 6,000–6,300 crore. We bake-in provisions of Rs 6,600 crore (4.3 percent of loans) for FY21," Motilal said.
At 1005 hours, shares of Bajaj Finserv were trading 2.85 percent up at Rs 6,563.55 while those of Bajaj Finance were 0.21 percent down at Rs 3,286 on BSE.
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