Bajaj Finance Q1 Results: Profits Jumped 159%, Beats Estimates

Bajaj Finance Q1 Results 2022
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Bajaj Finance, one of the largest NBFCs in India, reported its June quarter results on Wednesday. The results were above analysts' estimates. On Thursday morning, the share price was trading 8.5% higher at Rs 6,953. The share has fallen more than 10% YTD despite exceptional results.

Bajaj Q1 Results: Key Highlights

  • Net Profit: Rs 2596.25 crore, up 159% year-on-year, highest ever
  • Net Interest Income: Rs 6,638 crore, up 48% year-on-year
  • AUM: Rs 2.04 lakh crore, up 28%
  • Asset Quality: Gross NPA at 1.25% and Net NPA came down to 0.51%

Let us look at Bajaj Finance's Q1FY23 numbers in detail:

Bajaj Finance Q1 FY23 Earnings: Net profit surges 

Bajaj Finance reported a 159% year-on-year jump in consolidated net profit to Rs 2,596.25 crore for April-June 22. In the same quarter last year, the company reported Rs 1002.44 crore profit. Analysts had earlier estimated a consolidated net profit of about Rs 2,435.8 crore for the period between Apr and June. The company said the current profit is its highest ever.

Bajaj Finance Q1 Results: Net Interest Income Increase 

NBFCs primary business is to borrow money from different sources and lend the same borrowed money at a higher rate. The income it generates from this difference is known as net interest income. It is one of the crucial parameters as it helps us find out how much a company is earning from its core operations. The consolidated net Interest Income (NII) for Q1FY23 increased by 48% to Rs 6,638 crore as against Rs 4,489 crore in Q1FY22.

Bajaj Finance Q1 Results 2022: Asset Under Management (AUM)

Consolidated AUM rose to Rs 2.04 lakh crore from Rs 1.59 lakh crore, an increase of 28% year-on-year. Sequentially, the AUM increased from Rs 1.97 lakh crore. Core AUM growth was Rs 11,931 crore in Q1FY23.

Bajaj Finance Q1 FY23 Earnings: Asset Quality Improves 

The consolidated gross NPA ratio for Q1FY23 stood at 1.25%. It was 1.60% for the period between Jan and Mar and 2.96% for the year-ago period. The net NPA ratio came down at 0.51%, an improvement of 17 basis points sequentially and 95 bps year-on-year.

Bajaj Finance Q1 Results: Loan Losses and Provisions

For the June quarter, loan losses and provisions reported were Rs 755 crore as against Rs 1,750 crore in the year-ago period. The company holds a macro-economic and management overlay of Rs 1,000 crore.

Bajaj Finance Q1 Results: Business Growth 

All the businesses under Bajaj Finance did extremely well in Q1FY23. The consumer B2C business increased by 31% year-on-year. Rural B2B and B2C businesses grew by 57% and 34%, respectively. The commercial lending business was up by 34%, while auto finance (Consumer B2B) contracted 12% year-on-year.

Bajaj Finance Q1 FY23: Increase in the Customer Base 

Customer franchise stood at 60.30 million at the end of the June quarter, as compared to 50.45 million as of 30 June 2021, a growth of 20%. During the quarter, Bajaj Finance reported its highest ever quarterly increase of customers of 2.73 million. 

Bajaj Finance Q1 Results: Other Updates

New loans booked during the June quarter were 7.42 million as against 4.63 million last year in the same period, a growth of 60%. The capital adequacy ratio (including Tier-II capital) as of 30 June 2022 was 26.16%. The Tier-I capital was 23.84%.

Bajaj Finance Q1 Results 2022: Subsidiaries Update

Bajaj Housing Finance Limited: The AUM grew by 40% to Rs 57,425 crore as of 30 June 2022 from Rs 40,941 crore in Q1FY22. Net Interest Income for Q1FY23 increased by 77% to Rs 594 crore from Rs 335 crore in Q1FY22. Profit After Tax increased by 96% to Rs 316 crore.

Bajaj Financial Securities Limited: BFinsec acquired approximately 36,500 retail and HNI customers in Q1FY23. Customer franchise stood at approximately 367K at the end of June quarter. Total Income for Q1FY23 was Rs 38 crore as against Rs 15 crore in Q1FY22. BFinsec generated a profit after tax of Rs 1 crore in Q1FY23.

Bajaj Finance Q1 Results: Analysts' View

Bernstein: The research firm has maintained an OUTPERFORM rating on Bajaj Finance with a target of Rs 9,440 per share. The high target is due to the healthy performance driven by strong balance sheet growth. The report added that asset quality and digital transformation are the keys to monitoring.

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