26 July 2016
1QFY17 Results Update | Sector:
Financials
Bajaj Finance
Buy
BSE SENSEX
27,977
S&P CNX
8,591
CMP: INR9,853
TP: INR10,712 (+9%)
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Bloomberg
Equity Shares (m)
M.Cap.(INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val, INR m
Free float (%)
BAF IN
53.3
525.2 /7.8
9,990/4,678
24 / 52 /91
568
42.7
Financials & Valuations (INR b)
Y/E March
2016 2017E 2018E
NII
40.3
54.6
69.8
PPP
25.1
35.9
46.9
PAT
12.8
18.5
23.7
EPS (INR)
238.8 345.9 442.0
EPS Gr. (%)
33.4
44.9
27.8
BV/Sh. (INR)
1,368 1,663 2,040
RoA onAUM (%)
3.2
3.5
3.4
RoE (%)
21.1
22.8
23.9
P/E (x)
41.3
28.5
22.3
P/BV (x)
7.2
5.9
4.8
AUM growth robust at 40% YoY; lower operating cost drives PAT beat
Bajaj Finance’s (BAF) 1QFY17 PAT stood at INR4.24b, up 54% YoY (12% beat).
Better-than-expected growth in AUM, stable margins and lower-than-expected
operating expenses led to the impressive PAT beat.
AUM continued its robust growth trajectory, up 40% YoY (12% QoQ) to
INR496b, driven by 47% YoY growth in the consumer finance business and a
sharp uptick in growth (74% YoY) in the commercial business. The rural
business too grew more than 3x on a YoY basis. The SME segment grew at a
lower rate of 20%, largely led by muted growth in LAP book. In our view, this is
a good strategy by management as the LAP segment is beginning to heat up.
Asset quality remained healthy, with GNPLs (120dpd) at 1.47%. On a 150dpd
basis, GNPA increased only 2bp sequentially to 1.25%. Provision coverage
remained more than adequate at 73%. The company made additional provision
of INR191m for the mortgage portfolio during the quarter.
Due to strong growth in NII, the cost-to-income ratio decreased sharply from
46.3% in 1QFY16 and 43.9% in 4QFY16 to 41.4% in 1QFY17.
Other highlights:
1) 2W/3W business is witnessing some traction; 2) the share
of customers acquired through cross-sell in the quarter was around 60%,
compared to an average of 40-45%.
Valuation and view:
BAF, a dominant player in the consumer durable financing
segment, continues to reap the benefits of healthy consumer demand. It
continues to increase its market share in the consumer business, though a
higher share of incremental growth could be driven by the low-yield mortgage
business, which could pressurize margins. We upgrade our FY17/18 PAT
estimates by 2%/7%. The stock is trading at 5.9x/4.8x FY17/18E BV. We value
the stock at INR10,712 based on the RI model, implying PBV of 5.3x FY18E.
Maintain
Buy.
Sunesh Khanna
(Sunesh.Khanna@MotilalOswal.com); +91 22 3982 5521
Alpesh Mehta
(Alpesh.Mehta@MotilalOswal.com)/Piran
Engineer
(Piran.Engineer@MotilalOswal.com); +91 22 3980 4393
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Bajaj Finance
Exhibit 1:
Quarterly
Performance v/s Estimates (INR m)
Y/E March
Income from operations
Other Operating Income
Operating Income
YoY Growth (%)
Interest expenses
Net Income
YoY Growth (%)
Other income
Total Income
Operating Expenses
Operating Profit
YoY Growth (%)
Provisions and Cont.
Profit before Tax
Tax Provisions
Net Profit
YoY Growth (%)
Loan Growth (%)
Borrowings Growth (%)
Cost to Income Ratio (%)
Tax Rate (%)
1QFY17E
20,397
1,129
21,526
30.8
8,703
12,823
32.3
210
13,033
5,380
7,653
45.6
1,850
5,803
2,002
3,801
37.9
32.0
32.0
43.9
34.5
1QFY17A
21,659
1,205
22,864
38.9
8,833
14,031
44.8
147
14,178
5,865
8,312
58.1
1,797
6,515
2,275
4,240
53.8
39.5
40.5
41.4
34.9
Var (%)
6
7
6
1
9
Comments
Strong AUM growth of 40% YoY led to NII beat
9
9
-3
12
14
12
Cost Income came in much better than expectations
Tax rate in line
Strong NII growth and lower opex led to PAT beat
E: MOSL Estimates
AUM growth continues its robust trajectory at +40%
AUM growth continued its robust trajectory(+40% YoY, 12% QoQ) and touched
INR496b driven by 47% YoY growth in the consumer finance business and an
sharp uptick in growth (74% YoY) growth in the commercial business. The rural
business grew more than 3x on a YoY basis to INR16.9b.
However, the SME segment grew at lower rate of 20%, largely led by muted
growth in LAP book. Given the cautious outlook in LAP segment, BAF has
stopped sourcing LAP and home loans via distributors and is only giving loans to
its existing credit tested customers. We believe this is a good strategy by
management as the LAP segment is beginning to heat up.
Margins have sustained despite a declining interest rate scenario due to a
higher share of high-yielding fixed-rate consumer financing business and lower
share of LAP business.
The company has moved its NPA recognition policy from 150dpd to 120dpd.
Thus the YoY numbers are not comparable. On a 150dpd basis, asset quality
remained stable with GNPLs at 1.25%, up only 2bp sequentially. The company
made an additional provision of INR191m for the mortgage portfolio during the
quarter. PCR remained robust at 73%.
NIM improved 60bp YoY to 12.0%; Asset quality stable; PCR at 73%
Conference call highlights
Growth guidance:
Continues to guide for 20-25% growth in AUM and PAT over the medium term
FY17 C/I expected to 40-41%. (38-40% in 3-5 years). Improved on back of
operating leverage and reduction in dealer commission, which reduced on back
of direct to consumer focus.
26 July 2016
2

Bajaj Finance
Businesses:
Dental financing:
Have tied up with more than 450 clinics, and expect to
continue to witness strong traction
Urban Gold loans:
Started Urban gold loans recently and expect this product to
be distributed from all branches in the next three years
EMI Card:
Launched retail EMI card on June 1. The market size stands at
INR1.5tn. The business could potentially be twice that of consumer durables.
The company tied up with Future Group for this product.
rd
Digital product financing:
Mobile phone financing comprises 1/3 of this
portfolio. Growth is very strong, and so is the market opportunity. This business
could be twice that of consumer durables.
LAP:
Expect growth in LAP to pick up in 2H. The company has moved to the
direct-to-consumer model due to declining loan yields coupled with increasing
broker commissions. As a result, growth has been subdued, but should rebound
from 2HFY17 off a low base. In addition, the average ticket size should come
down from current INR15m to INR9-10m as the LRD book runs off.
Salaried Personal Loans:
The Company has been pulling back and moving
towards a direct-to-consumer model. Share of direct loans was only 35% nine
months back. It has increased to 55% now and should increase to 75% by end-
FY17. The business is done in 70 cities as compared to only 25 cities three years
ago.
Business Loans:
The dynamics of the business changes from city to city. The top
15 cities require different credit models, different organizational structures from
the other cities. The lending is generally unsecured in nature with an average
tenure of 18-24 months and an average ticket size of INR1.4-1.5m. In the Top 50
cities, 45% of sourcing is from DSAs while for the other cities, all sourcing is
done in-house.
Professional Loans:
There has been good traction in this segment. The idea is to
acquire the customer with a professional loan and then cross-sell home
loan/LAP to him.
Consumer durables:
Business did well on back of good AC sales, thanks to
prolonged summer. CD business does traditionally well in 1Q and 3Q. 1Q on the
back of summer (AC/cooler sales) and 3Q due to festive sales.
Digital financing
segment has the potential to be 2X of the consumer durable
segment, as the replacement cycle is short much shorter for digital products.
Lifestyle financing
– 33% volume comes from dental segment.( reach of 860
clinics)
Retail EMI
financing could be 2X of CD in 5-7 years.
Home loans:
55% of the business is direct. Expects to close FY17 with 75%
direct business. Expects growth to be back by 3Q on back of base effect.
EMI card
business contribute 55% of the retail book.
Business loans:
45% loans from direct channels in the top 50 cities. Beyond top
50 cities, DSAs are not effective and thus in these areas book is mostly direct.
Business loans is most granular business after CD.
Vehicle financing:
3W growth is on back of lower base.
26 July 2016
3

Bajaj Finance
Capital Raise:
Raised INR9.72b in Tier 2 capital in July. Management estimates that there will
not be need for more capital until end-FY18.
Asset quality / Provisioning:
Provisioning without one-off is still at 50% growth; this is on back of robust
growth in CD business. As the tenure is lower in this segment company provides
aggressively and provides nearly 100% for 90dpd, which is not the case for other
loans. Thus provisions grew at a faster clip.
30% of total delinquencies come from 2W-3W customers.
Borrowing:
With liquidity deficit situation improving in the last few months, bond yields
have come off, and the impact could be there in 2QFY17
Retail and corporate deposit likely to contribute 20% in 3-5 years.
Others:
Other income:
No one-offs. INR 130mn from fee products.
EMI cards are not given to 2W loan customers as many 2W customers are from
far flung areas where propensity to buy on EMI is lower. However, company
looks to cross sell other products to these segment of customers.
LAP remains hyper-competitive, but the competitive intensity seems to be
moderating. However, the company is more comfortable with its own
portfolio on back of direct model and asset quality comfort.
Credit bureau hit rate (score 750 and above) reduces by 10% points once we
move beyond 15 top cities. At top 75% cities it is just 15-20%. BAF is willing to
give loans to customers who don’t have a credit history based on its own
analytics and credit score card, but not to people who has bad CIBIL score.
Approx. 45% of new to BAF customers are with no credit history.
AUM Mix:
Over the next 1-3 years, management believes that the AUM mix will
be as follows – Consumer: 35%, SME: 45%, Commercial: 13% and Rural: 7%. As a
result of lower share from consumer financing business, margins are expected
to decline. However, opex and credit costs shall also decline.
Cost to income ratio:
The C/I ratio is expected to decline to 41-42% for FY17.
Over the medium term, it could go down to 38-40%. However, the company has
to invest to upgrade its technology to handle to significant increase in the
number of customers over the years.
26 July 2016
4

Bajaj Finance
Valuation and view
BAF is trading at 4.8x FY18 P/B. In our view premium to peers can be justified
on various counts.
Diversified and de-risked portfolio – a key strength of business model:
BAF has
also ensured that it has a diverse set of growth drivers in the portfolio versus
peers.
A diverse portfolio comprising of profit maximizes and scale builders
helps reduce cyclicality in growth and assets quality.
Cross Sell expert:
A well-diversified credit portfolio, focus on cross selling,
customer acquisition, and systematic expansion in delivery channels both
physical and virtual, selective distribution of products through these channels
are likely to sustain robust growth in AUM. These, along with its small market
share are likely to help sustain 30% CAGR in AUM over next 3 years.
Market share gains:
BAF is the largest consumer durables and lifestyle financier
in the country and has been continuously gaining market share in these
businesses. Continuous market share gain and strong distribution has created
entry barriers for competitors. One of the key strengths that BAF has built over
time is a quick turnaround time unmatched by most other retail financiers. Thus,
other than purchases on credit cards of banks, there are very few other
competitors that BAF sees in the consumer durables business, which enables it
with pricing power.
Well-managed asset quality and tested management capabilities:
Despite
lower growth and pressure on asset quality witnessed for peer group; BAF
continues to clock healthy growth and has one of the best asset quality among
the peer group. Management has not only demonstrated its ability to gain
market share in segments, but has been alert to potential asset quality risks as
well. It has withdrawn from certain segments like construction equipment, 3W
financing and slowed down on LAP in a timely manner.
Timely investment in automation and technology:
BAF has been proactive in
making timely investments in technology and automation which over a period of
time will help reducing operating cost and reduce delivery cost.
BAF continues to increase its market share in consumer business, as it has
almost monopoly in some of the business like lifestyle financing; however higher
share of incremental growth will be driven by low yielding mortgage business
which will exert some pressure on yields, however superior blended margins,
focused fee income strategy and low credit cost will keep core profitability
strong.
We value BAF based on residual income model assuming earnings CAGR of 12%
by FY35E, Rf=7.70%,
β=0.75,
risk premium of 5% and terminal growth rate of
5.5%. We expect net profit to grow at CAGR of 36% over FY16-18E and RoEs to
touch 24% by FY18E. The stock is currently trading at 5.9x/4.8x FY17/18E BV.
We value the stock at a target price of INR10,712 (implying 5.3x FY18E BV).
Buy
26 July 2016
5

Bajaj Finance
Exhibit 2:
Upgrade estimate to factor in higher growth and stable margins
INR B
NII
Other Income
Total Income
Operating Expenses
Operating Profits
Provisions
PBT
Tax
PAT
Loans
Borrowings
Credit Cost
RoA
RoE
Old Est.
FY17
FY18
58
1
59
24
35
8
28
10
18
572
498
1.4
3.4
22.4
72
1
73
29
44
10
34
12
22
732
644
1.5
3.3
22.5
New Est.
FY17
FY18
59
1
60
24
36
8
28
10
19
572
503
1.3
3.5
22.8
76
1
77
30
47
11
36
12
24
766
682
1.4
3.4
23.9
% Chg
FY17
2
0
2
2
2
0
2
2
2
0
1
-5
2
2
FY18
5
0
5
2
6
4
7
7
7
5
6
-7
4
6
Source: MOSL
26 July 2016
6

Bajaj Finance
Exhibit 3:
Quarterly Snapshot
FY15
1Q
Profit and Loss (INR m)
Total Income
Income from operations
Other Operating Income
Interest Expenses
Net Income
Other Income
Operating Expenses
Employee
Others
Operating Profits
Provisions
PBT
Taxes
Reported PAT
Asset Quality
GNPA (INR m)
NNPA (INR m)
GNPAs(%)
NNPAs(%)
PCR (%)
Ratios (%)
Cost to Income
Tax Rate
CAR
Tier I
RoA (not annualised)
RoE (not annualised)
Key Details (INR m)
AUM
On book Loans
Off book Loans
AUM Mix (%)
Consumer Finance
SME Business
Commercial
Rural
12,436
11,801
635
4,996
7,440
24
3,428
1,078
2,350
4,035
829
3,206
1,092
2,114
2Q
12,322
11,703
620
5,445
6,878
96
3,186
1,059
2,127
3,788
800
2,987
1,016
1,972
3Q
14,766
14,164
601
5,924
8,842
88
3,921
1,198
2,723
5,009
1,079
3,931
1,347
2,584
4Q
14,294
13,532
762
6,118
8,176
156
3,749
1,172
2,577
4,583
1,138
3,446
1,136
2,310
1Q
16,462
15,716
746
6,771
9,692
96
4,531
1,446
3,085
5,257
1,033
4,224
1,468
2,756
2Q
16,799
15,921
878
6,947
9,853
206
4,411
1,498
2,913
5,648
1,368
4,280
1,486
2,794
FY16
3Q
20,614
19,717
897
7,493
13,121
83
5,490
1,705
3,784
7,714
1,462
6,252
2,167
4,085
4Q
19,168
18,212
957
8,058
11,110
406
5,061
1,647
3,414
6,455
1,565
4,890
1,740
3,150
FY17
1Q
22,864
21,659
1,205
8,833
14,031
147
5,865
2,018
3,847
8,312
1,797
6,515
2,275
4,240
Variation (%)
QoQ
YoY
19
19
26
10
26
-64
16
23
13
29
15
33
31
35
39
38
62
30
45
52
29
40
25
58
74
54
55
54
2,898
692
1.1
0.3
76.0
45.9
34.1
18.0
15.2
0.9
5.1
3,772
1,284
1.4
0.5
67.0
45.7
34.0
19.3
15.1
0.7
4.6
4,429
1,447
1.5
0.5
68.0
43.9
34.3
18.7
14.7
0.9
5.6
4,711
1,404
1.5
0.5
71.0
45.0
33.0
18.0
14.2
0.7
4.8
5,762
1,875
1.7
0.6
68.0
46.3
34.8
20.7
17.4
0.9
4.9
6,098
1,680
1.7
0.5
73.0
43.9
34.7
20.5
17.3
0.8
4.2
5,387
1,086
1.3
0.3
80.0
41.6
34.7
19.5
16.1
1.0
5.8
5,328
1,213
1.2
0.3
77.0
43.9
35.6
19.5
16.1
0.8
4.3
7,045
1,965
1.5
0.4
73.0
41.4
34.9
17.8
14.8
0.9
5.5
496,080
479,230
16,850
32
62
22
5
269,430 280,040 308,220 324,100 355,570 379,640 434,520 442,290
256,420 267,510 295,280 311,990 340,950 365,150 417,600 433,144
13,010 12,530 12,940 12,110 14,620 14,490 16,920
9,146
40
53
7
0
40
54
6
1
38
55
6
1
41
48
10
1
42
47
10
1
41
47
10
2
42
44
11
3
43
42
12
3
12
11
84
40
41
15
44
40
12
3
Source: Company, MOSL
26 July 2016
7

Bajaj Finance
Story in charts
Exhibit 4:
Nos. of loan disb. grew at healthy 48% YoY
Loans Disbursed (Nos '000)
61
29
15
15
(9)
29
59
52
37
25
Growth (%)
48
37
Exhibit 5:
AUM growth continues to remain strong
AUM (INR b)
33
40
41
37
35
AUM Gr. (%)
32
36
41
36
40
40
36
29
33
192 198 225 241 269 280 308 324 356 380 435 442 496
Source: MOSL, Company
Source: MOSL, Company
Exhibit 6:
AUM mix: SME now accounts for 40% only
Consumer Finance
9
49
9
50
8
52
8
53
7
53
6
54
SME Business
6
55
10
48
10
47
Commercial
10
47
11
44
12
42
12
40
Exhibit 7:
Cost/income ratio on a downward trajectory
Cost income (%)
47.6
45.0
44.3
47.5
45.9 45.7
43.9
45.0
46.3
43.9
41.6
43.9
41.4
42
41
40
39
40
40
38
41
42
41
42
43
44
Source: MOSL, Company
Source: MOSL, Company
Exhibit 8:
NPL performance remain best among peers
GNPA (%)
NNPA (%)
0.41
0.26 0.28
0.48 0.49 0.45 0.55 0.46
0.28 0.27
0.25 0.26 0.23
Exhibit 9:
Well capitalized
CAR (%)
Tier 1 (%)
17.7 16.5
17.4 17.3
16.1 15.2 15.1
16.1 16.1 14.8
14.7 14.2
1.14 1.14 1.15 1.18 1.13 1.41 1.5 1.51 1.69 1.67 1.29 1.23 1.47
20.9 19.5 19.1 18.0 19.3 18.7 18.0 20.7 20.5 19.5 19.5 17.8
Source: MOSL, Company
Source: MOSL, Company
26 July 2016
8

Bajaj Finance
Exhibit 10:
Financials: Valuation metrics
Rating
66
ICICIBC*
HDFCB
AXSB
KMB*
YES
IIB
IDFC Bk
FB
DCBB
JKBK
SIB
Private Aggregate
SBIN (cons)*
PNB
BOI
BOB
CBK
UNBK
OBC
INBK
ANDB
Public Aggregate
Banks Aggregate
HDFC*
LICHF
IHFL
GRHF
REPCO
DEWH
Housing Finance
RECL
POWF
Infra Finance
SHTF
MMFS
BAF
MUTH
SKSM
Asset Finance
NBFC Aggregate
Financials
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Neutral
Buy
Neutral
Buy
Buy
Neutral
Neutral
Buy
Neutral
Buy
Neutral
UR
Buy
CMP
Mcap
EPS (INR)
FY18
20.8
70.2
37.4
34.0
97.3
63.8
4.1
4.7
8.6
21.2
3.7
P/E (x)
BV (INR)
P/BV (x)
FY18
1.09
3.23
1.97
3.19
2.53
2.97
1.12
1.23
1.29
0.42
0.67
2.34
0.93
0.59
0.31
0.90
0.47
0.37
0.23
0.48
0.45
0.71
1.50
3.75
2.07
2.36
8.27
3.87
1.02
3.80
0.56
2.08
0.97
2.06
2.42
5.04
1.57
4.12
2.99
2.74
1.72
RoA (%)
FY17
1.19
1.90
1.32
1.61
1.81
1.92
1.09
0.67
0.98
0.99
0.61
0.49
0.44
0.12
0.48
0.31
0.43
0.28
0.49
0.15
FY18
1.22
1.89
1.31
1.82
1.83
1.96
1.12
0.67
0.93
1.05
0.64
0.54
0.50
0.27
0.54
0.36
0.53
0.32
0.56
0.39
RoE (%)
FY17
11.1
18.9
13.8
14.2
22.0
16.2
7.2
8.0
11.3
12.7
10.7
FY18
11.8
19.6
14.4
15.4
22.7
17.6
9.4
9.0
11.7
13.7
11.7
Buy
Buy
Buy
Buy
Buy
Buy
Neutral
Neutral
Buy
Buy
Buy
Buy
Buy
(INR) (USDb) FY17
269
23.7 18.1
1,247
47.8 58.4
538
19.4 31.8
765
21.3 26.8
1,183
7.5
78.9
1,157
10.4 50.5
51
2.6
3.0
66
1.7
3.9
100
0.4
7.4
69
0.5
17.6
22
0.4
3.1
135.8
230
27.0 19.3
130
3.9
15.7
110
1.4
9.3
156
5.5
14.7
254
2.1
33.1
132
1.4
26.8
116
0.6
22.1
153
1.1
22.2
61
1.9
2.9
44.8
180.6
1,380
33.0 40.1
518
4.0
39.5
742
4.7
68.2
292
1.6
8.3
828
0.8
30.3
225
1.0
29.7
45.1
216
3.2
59.2
222
4.4
46.8
7.7
1,198
4.1
75.5
321
2.7
15.5
9,853
8.0 308.1
278
1.7
24.9
864
1.7
48.8
18.2
71.0
251.6
FY17
11.1
21.3
16.9
28.6
15.0
22.9
17.1
16.9
13.6
3.9
7.1
19.7
24.3 11.9
19.9
8.3
23.5 11.9
18.7 10.6
42.4
7.7
36.7
4.9
27.9
5.2
29.1
6.9
8.2
20.6
11.8
16.9
46.3 24.2
47.3 13.1
84.0 10.9
10.7 35.1
39.0 27.3
36.4
7.6
21.3
68.6
3.6
49.1
4.7
4.2
94.2 15.9
18.8 20.7
380.8 32.0
32.0 11.2
52.5 17.7
20.6
14.7
16.2
FY18 FY17 FY18 FY17
8.4
145 159 1.30
17.7 332 386 3.75
14.4 243 274 2.21
22.5 207 240 3.69
12.2 391 468 3.03
18.1 334 389 3.46
12.3
42
46
1.20
14.1
50
54
1.32
11.7
69
78
1.45
3.2
146 162 0.47
5.9
30
33
0.73
16.5
2.64
9.4
240 259 1.01
6.5
200 220 0.65
4.7
337 356 0.33
8.3
159 173 0.98
6.0
505 537 0.50
3.6
318 351 0.41
4.2
473 494 0.25
5.3
298 320 0.51
7.4
129 136 0.47
8.7
0.76
13.5
1.64
19.4 194 221 4.64
10.9 213 251 2.43
8.8
280 315 2.65
27.4
28
35 10.28
21.2 179 214 4.61
6.2
194 221 1.16
18.0
4.30
3.1
336 389 0.64
4.5
72
107 3.09
3.8
1.20
12.7 507 581 2.36
17.0 119 133 2.69
25.9 1,631 1,956 6.04
8.7
157 177 1.77
16.5 157 210 5.49
16.8
3.31
12.7
3.17
13.3
1.90
8.3 9.7
8.2 9.5
2.8 6.8
9.6 11.2
6.7 8.1
8.7 11.0
4.8 5.8
7.7 9.4
2.3 6.2
1.89
1.49
3.84
2.33
2.14
1.19
2.10
1.51
3.78
2.34
2.17
1.21
20.0
20.1
23.4
32.4
18.2
16.2
22.1
20.9
28.2
33.5
19.8
17.5
2.63 2.55 18.9 18.9
2.69 2.35 85.1 55.0
2.17
2.14
3.14
3.29
6.30
2.27
2.26
3.02
3.47
4.48
15.7
13.7
20.6
16.7
36.7
17.1
15.0
21.2
19.2
28.6
*Multiples adj. for value of key ventures/Investments; For ICICI Bank and HDFC Ltd BV is adj. for investments in subs. Source: Company, MOSL
26 July 2016
9

Bajaj Finance
Financials and Valuations
Income Statement
Y/E MARCH
Interest Income
Interest Expended
Net Interest Income
Change (%)
Other Operating Income
Other Income
Net Income
Change (%)
Operating Expenses
Operating Income
Change (%)
Provisions and W/Offs
PBT
Tax
Tax Rate (%)
PAT
Change (%)
Proposed Dividend
Balance Sheet
Y/E MARCH
Capital
Reserves & Surplus
Net Worth
Borrowings
Change (%)
Other liabilities & provisions
Total Liabilities
Investments
Change (%)
Advances
Change (%)
Net Fixed Assets
Other assets
Total Assets
E: MOSL Estimates
2012
19,963
7,462
12,501
36.9
1,668
89
14,257
37.7
6,691
7,566
31.7
1,544
6,022
1,958
32.5
4,064
64.6
496
2013
29,248
12,057
17,191
37.5
1,689
177
19,057
33.7
8,523
10,534
39.2
1,818
8,716
2,803
32.2
5,913
45.5
747
2014
37,896
15,732
22,163
28.9
2,429
419
25,011
31.2
11,511
13,500
28.2
2,588
10,912
3,722
34.1
7,190
21.6
802
2015
51,200
22,483
28,717
29.6
2,618
364
31,699
26.7
14,284
17,415
29.0
3,846
13,569
4,591
33.8
8,979
24.9
903
2016
69,566
29,269
40,297
40.3
3,477
792
44,566
40.6
19,492
25,074
44.0
5,429
19,646
6,861
34.9
12,785
42.4
377
2017E
93,854
39,302
54,552
35.4
4,764
901
60,216
35.1
24,346
35,870
43.1
7,589
28,281
9,757
34.5
18,524
44.9
2,316
2018E
123,175
53,325
69,850
28.0
5,955
951
76,756
27.5
29,811
46,944
30.9
10,812
36,132
12,466
34.5
23,667
27.8
2,958
(INR Million)
2019E
160,680
71,187
89,493
28.1
7,146
951
97,590
27.1
35,865
61,725
31.5
13,055
48,670
16,791
34.5
31,879
34.7
3,985
(INR Million)
2019E
536
135,948
136,483
900,068
32.0
11,929
1,048,481
13,268
8.0
1,011,312
32.0
2,900
21,001
1,048,481
2012
413
19,923
20,336
102,264
52.4
6,667
129,267
55
-2.3
122,831
68.9
1,388
4,993
129,267
2013
495
33,173
33,668
133,490
30.5
11,051
178,209
53
-4.0
167,440
36.3
1,762
8,957
178,211
2014
498
39,411
39,909
197,496
47.9
8,776
246,180
282
436.3
229,710
37.2
2,199
13,990
246,180
2015
502
47,497
47,999
266,908
35.1
13,206
328,112
3,323
1,077.9
311,995
35.8
2,492
10,303
328,112
2016
536
72,711
73,246
370,247
38.7
6,903
450,397
10,341
211.2
433,144
38.8
2,870
18,210
464,565
2017E
536
88,526
89,061
503,141
35.9
8,284
600,486
11,375
10.0
571,751
32.0
2,880
14,481
600,486
2018E
536
108,731
109,267
681,870
35.5
9,941
801,077
12,285
8.0
766,146
34.0
2,890
19,757
801,077
26 July 2016
10

Bajaj Finance
Financials and Valuations
Ratios
Y/E MARCH
Spreads Analysis (%)
Yield on Advances
Cost of borrowings
Interest Spread
Net Interest Margin
Profitability Ratios (%)
RoE
RoA
RoA on AUM
Int. Expended/Int.Earned
Secur. Inc./Net Income
Efficiency Ratios (%)
Op. Exps./Net Income
Empl. Cost/Op. Exps.
Asset-Liability Profile (%)
Loans/Borrowings Ratio
Net NPAs to Adv.
CAR
Tier 1
Valuation
Book Value (INR)
Price-BV (x)
Adjusted BV (INR)
Price-ABV (x)
EPS (INR)
EPS Growth (%)
Price-Earnings (x)
OPS (INR)
OPS Growth (%)
Price-OP (x)
Dividend per Share (INR)
Dividend Yield (%)
E: MOSL Estimates
2012
20.4
8.8
11.6
12.2
2013
20.2
10.2
9.9
11.7
2014
19.1
9.5
9.6
10.8
2015
18.9
9.7
9.2
10.4
2016
18.7
9.2
9.5
10.6
2017E
17.8
9.0
8.8
10.6
2018E
17.7
9.0
8.7
10.3
2019E
17.5
9.0
8.5
9.9
24.0
3.8
37.4
11.7
21.9
3.8
3.9
41.2
8.9
19.5
3.4
3.5
41.5
9.7
20.4
3.1
3.2
43.9
8.3
21.1
3.2
3.3
42.1
7.8
22.8
3.5
3.6
41.9
7.9
23.9
3.4
3.5
43.3
7.8
25.9
3.4
3.7
44.3
7.3
46.9
28.4
44.7
28.8
46.0
29.6
45.1
31.6
43.7
32.3
40.4
34.1
38.8
34.8
36.8
35.3
120.1
0.1
17.5
15.0
125.4
0.2
22.0
18.7
116.3
0.3
21.0
18.0
116.9
0.5
18.0
14.2
117.0
0.3
19.5
16.1
113.6
0.4
17.0
14.0
112.4
0.5
17.5
13.0
112.4
0.0
19.5
16.0
487
20.2
486.0
20.3
98.4
45.9
100.2
183.1
16.8
53.8
12.0
0.1
680
14.5
677.4
14.5
119.4
21.3
82.5
212.6
16.1
46.3
15.1
0.2
802
12.3
798
12.4
144.5
21.1
68.2
271.4
27.6
36.3
16.1
0.2
957
10.3
947
10.4
179.0
23.9
55.0
347.3
28.0
28.4
18.0
0.2
1,368
7.2
1,360
7.2
238.8
33.4
41.3
468.2
34.8
21.0
7.0
0.1
1,663
5.9
1,663
5.9
345.9
44.9
28.5
669.8
43.1
14.7
43.2
0.4
2,040
4.8
2,040
4.8
442.0
27.8
22.3
876.6
30.9
11.2
55.2
0.6
2,549
3.9
2,549
3.9
595.3
34.7
16.6
1,152.7
31.5
8.5
74.4
0.8
26 July 2016
11

Bajaj Finance
Corporate profile: Bajaj Finance
Company description
Bajaj Finance is a subsidiary of Bajaj Finserv, which
holds 57% into the company. The company has
transformed itself from a captive auto financier
offering two wheeler loans for Bajaj Auto to a one
of the most successful well diversified retail NBFCs.
The company operates in over ten business
segments across consumer, SME and commercial
businesses and is market leader in consumer
durable and two wheeler financing (18% market
share), lifestyle financing and is a large player in
loan against property segment (15% market share).
Exhibit 12: Shareholding pattern (%)
Jun-16
Promoter
DII
FII
Others
57.4
5.5
20.1
17.1
Mar-16
57.4
6.1
18.9
17.6
Jun-15
57.6
5.8
18.1
18.5
Exhibit 11: Sensex rebased
Exhibit 13: Top holders
Holder Name
Maharashtra Scooters Limited
Government Of Singapore
Smallcap World Fund,Inc
% Holding
3.5
2.7
1.1
Note: FII Includes depository receipts
Exhibit 14:
Top management
Name
Rahul Bajaj
Nanoo Pamnani
Sanjiv Bajaj
Rajeev Jain
Anant Damle
Designation
Chairman
Vice Chairman
Vice Chairman
Managing Director
Company Secretary
Exhibit 15: Directors
Name
Rahul Bajaj
Nanoo Pamnani*
Sanjiv Bajaj
Rajeev Jain
Madhur Bajaj
Rajiv Bajaj
D J Balaji Rao*
Name
D S Mehta*
Dipak Poddar*
Gita Piramal*
Omkar Goswami*
Rajendra Lakhotia*
Ranjan Sanghi*
*Independent
Exhibit 16: Auditors
Name
Dalal & Shah LLP
Shyamprasad D Limaye
Type
Statutory
Secretarial Audit
Exhibit 17: MOSL forecast v/s consensus
EPS
(INR)
FY17
FY18
MOSL
forecast
345.9
442.0
Consensus
forecast
309.3
396.6
Variation
(%)
11.9
11.4
26 July 2016
12

BAJAJ FINANCE REPORT GALLERY
BAF
BAF
SECTOR UPDATES

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BAJAJ FINANCE
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