20 July 2018
1QFY19 Results Update | Sector: Financials - NBFC
Bajaj Finance
Downgrade to Neutral
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CMP: INR2,517
TP: INR2,500 (-1%)
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Strong core business; Ind-AS transition impacts networth by ~5%
Bajaj Finance (BAF) reported PAT of INR8.36b under Ind-AS accounting
(INR10.2b
(+69% YoY) under IGAAP v/s our estimate of INR8.7b).
The
quarter was marked by continued new client addition (+33% YoY),
improving spreads YoY and stable asset quality.
AUM grew 35% YoY to
INR933b in the quarter. Adjusted for short-term IPO financing in the
base quarter, AUM was up 39% YoY.
Ind-AS impact:
(a) FY17 networth declined ~6%, mostly due to
amortization of up-fronted income (net basis INR7.97b, pretax) and hit
due to adoption of ECL (INR2.7b pretax). (b) On a comparative basis, FY18
PAT was 7% lower under Ind-AS v/s I-GAAP, again largely due to
amortization of fee and subvention income.
While there has been
change in PAT due to fee income amortization, cash flow/economic
value generated out of business remains the same.
Since a higher share of fee income/subvention income related businesses
is written in 1Q and 3Q of the year, Ind-AS impact due to amortization is
likely to be higher in these quarters. In FY18, the amortization-related
impact for the full year (INR1.97b) was largely equal to that in 1Q
(INR1.86b), and we expect a similar trend in FY19 too.
1QFY19 PAT was
INR10.2b as per I-GAAP and INR8.36b as per Ind-AS (EIR impact of
INR2.2b).
Other highlights:
(a) GNPA % improved 30bp YoY to 1.4%. b) Standard
assets provisioning on balance sheet improved to 90bp v/s 40bp earlier
due to Ind-AS implementation and higher provisioning requirement in
stage 2 loans (30-90dpd). c) Total provisions on the balance sheet stand
at 1.9% of AUM v/s GNPA % of 1.4%.
Estimate change:
We cut reported BV by ~3% for FY20 (to account for
impact of amortization of fees and ECL). However, our FY19/20 PAT
estimates are largely unchanged as the impact of amortization of fees is
compensated by a better-than-expected core business performance.
Valuation view:
Since our coverage initiation in August 2013, BAF stock
has delivered 23x (compounded at CAGR of 87%) returns. During this
period, loan book and profits have grown approx 5x, and RoE has
remained strong at 20%. Valuations have got significantly re-rated from
P/B of 1x to P/B of 6x and PE of ~30x. This multiple expansion is a result
of a high quality franchisee and consistent strong growth delivered. The
growth prospects remain strong as BAF adds new lines of businesses,
even though profitability may have some variance. We think that at P/B
of 6x FY20 and PE of 30x, valuations have become premium. At our target
price of INR2,500, there is no upside – hence we downgrade to
Neutral.
Risk to our rating change essentially remains from continued multiple
expansion.
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
575
1455 / 21.1
2536 / 1514
10/46/49
2244
44.9
2020E
133.2
93.2
47.7
82.9
32.2
398
3.6
23.0
10.0
30.4
6.3
0.3
Financials & Valuations (INR b)
Y/E March
2018 2019E
NII
PPP
PAT
EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoA on AUM (%)
RoE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
Div. Yield (%)
58.0
9.4
0.1
40.1
7.8
0.2
72.3
48.8
25.0
43.4
35.9
269
3.3
20.4
10.1
100.0
69.7
36.1
62.7
44.5
325
3.5
21.1
10.0
Research Analyst: Alpesh Mehta
(Alpesh.Mehta@MotilalOswal.com); +91 22 3982 5415
| Piran Engineer
(Piran.Engineer@MotilalOswal.com); +91 22 3980 4393
Nitin Aggarwal
(Nitin.Aggarwal@MotilalOswal.com); +91 22 3982 5540
| Shubhranshu Mishra
(Shubhranshu.Mishra@MotilalOswal.com); +91 22 3982 5558
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.
 Motilal Oswal Financial Services
Bajaj Finance
BAF: Quarterly Performance
Y/E March
1Q
(INR Million)
FY18
FY19E
3Q
4Q
174,517
36.9
62,405
112,112
38.0
239
112,350
42,672
69,440
43.0
13,664
55,776
19,941
36,073
44.5
FY18
2Q
3Q
4Q
1Q
FY19
2Q
Revenue from operations
28,329
30,862
35,406
34,931
39,365
42,757
46,247
46,149
127,480
YoY Growth (%)
23.9
32.1
31.5
31.1
39.0
38.5
30.6
32.1
37.5
Interest expenses
10,729
11,438
11,709
12,286
13,636
15,289
16,225
17,254
46,216
Net Income
17,600
19,425
23,698
22,645
25,728
27,467
30,022
28,895
81,264
YoY Growth (%)
25.4
40.8
38.4
34.7
46.2
41.4
26.7
27.6
48.6
Other income
10
161
27
48
49
60
60
70
239
Total Income
17,610
19,586
23,724
22,693
25,777
27,527
30,082
28,965
81,503
Operating Expenses
7,433
8,752
9,494
8,940
9,536
10,203
10,917
12,016
32,719
Operating Profit
10,177
10,833
14,230
13,753
16,241
17,324
19,164
16,949
48,545
YoY Growth (%)
22.4
36.8
38.2
40.4
59.6
59.9
34.7
23.2
67.1
Provisions and Cont.
3,051
2,278
2,468
2,311
3,268
3,200
3,400
3,797
10,349
Profit before Tax
7,126
8,555
11,762
11,442
12,973
14,124
15,764
13,153
38,196
Tax Provisions
2,517
2,986
4,094
3,966
4,615
5,028
5,612
4,686
13,471
Net Profit
4,609
5,569
7,668
7,476
8,359
9,096
10,152
8,466
24,963
YoY Growth (%)
8.7
36.6
38.0
66.4
81.3
63.3
32.4
13.3
35.9
E: MOSL Estimates; FY18 diff. in qtr vs yearly no. on account of IND AS reporting; 1Q/4QFY18 as per IND AS; 2Q/3QFY18 as per I GAAP
20 July 2018
2
 Motilal Oswal Financial Services
Bajaj Finance
AUM growth of 35% YoY is
commendable despite the
high base
Strong AUM growth streak continues
The number of loans disbursed increased 49% YoY in the quarter, largely driven
by new client addition (2.1m, +33% YoY). The number of clients now stands at
28.3m compared to 21.7m a year back.
AUM grew 35% YoY to INR933b driven by consumer and rural lending segments.
Interestingly, LAP book grew 42% YoY to INR121b – growth has resumed after 2-
3 years.
Spreads stable; GNPL ratio
improves 20bp YoY to 1.4%
Spreads stable, asset quality improves on a YoY basis
Calculated margins improved 95bp YoY to 11.85% largely due to the impact of
the QIP in 2QFY18. Spreads, however, have been largely stable YoY.
While still small, the share of borrowings coming from public deposits is
increasing and now stands at 14% vs 10% a year back.
Opex grew 28% YoY, below AUM growth of 35% YoY. We believe this could be
due to the rising share of SME lending (which has lower opex ratios compared to
consumer and rural lending)
GNPL/NNPL ratio improved 20bp/10bp YoY to 1.4%/0.4%.
INR6b hit to FY17 net
worth; FY18 PAT 7% lower
Impact of Ind-AS
FY17 networth impairment of ~INR6.2b largely led by a) INR8b pre-tax impact of
amortisation of upfront fees and interest subsidy net of loan acquisition charges
b) INR2.7b pre-tax impact due to ECL (Standard assets provisioning up from
40bp to 89bps). There was a positive pre-tax benefit of INR790m due to
amortisation of liability raising cost and INR460m MTM gains on investments.
FY18 PAT is restated to INR24.96b under Ind-AS vs reported PAT of INR26.74b
under I-GAAP led by a) INR1.3b impact of amortisation of upfront fees and
interest subsidy net of loan acquisition charges b) INR450m on account
ESOP and c) INR286m due to MTM on investment. There was a positive benefit
on account of a) INR106m for ECL on loans b) INR84m amortisation of liability
raising cost and c) INR52m cost on account of employee benefit plan
20 July 2018
3
 Motilal Oswal Financial Services
Bajaj Finance
Conference call highlights
Business Updates
Witnessed significant operating leverage across segments of the company
Management restructured the mortgage business resulting in INR30-40m per
month cost savings
40% of SME book comes from tier 3 cities
Ind-AS impact
Provisions on NPLs have gone down while those on standard assets have gone
up under Ind-AS
Stage 1 – current customers; Stage 2- 1-2 month overdue customers; Stage 3: 3+
months overdue
Easier to predict ECL in retail lending vs corporate lending, since there is more
empirical data
Others
Management reiterated C/I ratio of 40% (despite the 37% ratio achieved in 1Q)
BAF is among the Top 2 LAS players in India
BHFL profitability will be subdued for FY18. Improvement will commence in
FY19.
Around 50% of BHFL comes from BT. Business done only from 45 cities in India.
CoF from bond market 15-20bp lower than for parent.
In the past three years, 1Q CD sales have been better than 3Q
Valuation and view
Since our coverage initiation in August 2013, BAF stock has delivered 23x
(compounded at CAGR of 87%) returns. During this period, loan book and profits
have grown approx 5x, and RoE has remained strong at 20%. Valuations have
got significantly re-rated from P/B of 1x to P/B of 6x and PE of ~30x. This
multiple expansion is a result of a high quality franchisee and consistent strong
growth delivered. The growth prospects remain strong as BAF adds new lines of
businesses, even though profitability may have some variance.
We think that at P/B of 6x FY20 and PE of 30x, valuations have become
premium. At our target price of INR2,500, there is no upside – hence we
downgrade to
Neutral.
Risk to our rating change essentially remains from
continued multiple expansion.
Estimate change :
We cut reported BV by ~3% for FY20 (to account for impact of
amortization of fees and ECL) however, our FY19/20 PAT estimates are largely
unchanged as impact of amortization of fees is compensated by better than
expected core business performance.
20 July 2018
4
 Motilal Oswal Financial Services
Bajaj Finance
Exhibit 1: Quarterly Snapshot
FY18
1Q
Profit and Loss (INR m)
Total 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)
GNPA (%)
NNPA (%)
PCR (%)
Ratios (%)
Cost to Income
Tax Rate
CAR
Tier I
RoA (not annualised)
RoE (not annualised)
Key Details (INR b)
AUM
On book Loans
Off book Loans
AUM Mix (%)
Consumer Finance
SME Business
Commercial
Rural
28,329
10,729
17,600
10
7,433
3,169
4,263
10,177
3,051
7,126
2,517
4,609
4Q
34,931
12,286
22,645
48
8,940
4,035
4,905
13,753
2,311
11,442
3,966
7,476
FY19
1Q
39,365
13,636
25,728
49
9,536
4,471
5,065
16,241
3,268
12,973
4,615
8,359
Variation (%)
QoQ
YoY
13
11
14
0
7
11
3
18
41
13
16
12
39
27
46
375
28
41
19
60
7
82
83
81
11,071
3,451
1.7
0.5
69.0
42.2
35.3
20.2
14.2
1.0
6.1
689
651
38
22
12
13
6
11,415
2,931
1.5
0.4
75.0
39.4
34.7
24.7
19.7
1.0
4.5
840
771
69
47
31
15
7
11,933
3,176
1.4
0.4
74.0
37.0
35.6
23.0
17.9
1.2
6.0
933
858
75
21
13
13
7
5
8
8
-8
11
11
8
35
32
95
Source: MOSL, Company
20 July 2018
5
 Motilal Oswal Financial Services
Bajaj Finance
Story in charts
Exhibit 2: No. of loan disb. grew at healthy 49% YoY
Loans Disbursed (Nos '000)
58
56
48
40
35
36
Growth (%)
58
51
48
49
32
Exhibit 3: AUM growth remains strong
AUM (INR b)
36
41
36
40
38
33
36
AUM Gr. (%)
39
38
35
40
35
48
37
25
Source: MOSL, Company
Source: MOSL, Company
Exhibit 4: Asset quality improved
GNPA (%)
0.6
0.5 0.5
0.5
0.3 0.3
0.4 0.4
0.4
0.4
NNPA (%)
0.5 0.5 0.5
0.4 0.4
Exhibit 5: Return ratios largely stable
RoE (%)
3.6
2.8
3.6
4.0
3.2
3.2
RoA (%)
3.6
3.2
4.4
3.2
4.0
3.2
4.4
4.0 4.0
1.5 1.5 1.7 1.7 1.3 1.2 1.5 1.6 1.5 1.7 1.7 1.7 1.7 1.5 1.4
Source: MOSL, Company
Source: MOSL, Company
20 July 2018
6
 Motilal Oswal Financial Services
Bajaj Finance
Exhibit 6: Financials - Valuation metrics
Rating
66
ICICIBC*
AXSB
KMB*
YES
IIB
FB
DCBB
SIB
Equitas
RBL
Private Aggregate
SBIN (cons)*
PNB
BOI
BOB
CBK
UNBK
INBK
Public Aggregate
Banks Aggregate
HDFC*
LICHF
IHFL
PNBHF
GRHF
REPCO
DEWH
Housing Finance
SHTF
MMFS
BAF
CIFC
SCUF
LTFH
MUTH
MAS
CAFL
Asset Finance
FY20E
Buy
Buy
Neutral
Buy
Buy
Buy
Neutral
Buy
Buy
Buy
Buy
Neutral
Neutral
Buy
Neutral
Neutral
Buy
CMP
Mcap
P/E (x)
P/BV (x)
RoA (%)
RoE (%)
(INR) (USDb) FY18 FY19E FY20E FY18 FY19E FY20E FY18 FY19E FY20E FY18 FY19E FY20E
261
24.5
15.6
9.6
6.8
1.1
0.9
0.9
0.8
1.1
1.4
6.8
10.1 13.2
527
19.5 474.5 24.3 14.3
2.1
2.0
1.7
0.0
0.7
1.1
0.5
8.4
12.9
1,350 38.7
41.5 31.1 24.5
5.1
4.4
3.7
1.7
1.7
1.8
12.5 12.7 13.8
391
12.8
21.2 16.5 12.7
3.5
3.0
2.5
1.6
1.5
1.5
17.7 19.5 21.2
1,889 164.6 31.4 23.1 17.5
4.8
4.2
3.3
1.8
2.1
2.4
16.5 19.4 21.0
86
2.5
18.1 14.7 10.9
1.4
1.3
1.2
0.7
0.8
0.9
8.3
9.1
11.2
163
0.7
20.5 17.2 14.6
1.9
1.7
1.5
0.9
0.9
0.9
10.9 10.8 11.5
22
0.6
11.7
7.2
5.9
0.8
0.7
0.7
0.4
0.6
0.7
6.6
10.0 11.3
133
0.7
143.8 25.2 14.1
2.0
1.9
1.7
0.3
1.1
1.5
1.4
7.7
12.6
556
3.4
36.7 27.6 19.3
3.5
3.3
2.9
1.1
1.2
1.3
11.6 12.2 15.8
260
75
83
120
233
77
327
33.5
3.0
2.0
4.5
2.4
1.3
2.3
-42.7
-1.5
-1.9
-12.3
-3.7
-1.4
12.5
12.5
-6.6
65.4
20.5
27.9
-17.7
9.7
7.8
12.7
19.8
9.5
5.8
21.6
6.9
0.9
0.5
0.4
0.8
0.5
0.4
0.9
0.9
0.6
0.4
0.7
0.5
0.3
0.9
0.8
0.6
0.4
0.7
0.5
0.3
0.8
-0.2
-1.7
-1.0
-0.3
-0.7
-1.1
0.5
0.4
-0.4
0.0
0.2
0.1
-0.1
0.6
0.6
0.2
0.1
0.4
0.4
0.1
0.7
-3.5
-29.6
-17.8
-5.8
-12.2
-23.7
8.3
7.4
-8.1
0.6
3.5
1.8
-2.1
9.8
13.2
4.4
1.9
7.2
8.3
1.6
12.8
Buy
Neutral
Buy
Buy
Neutral
Buy
Buy
Buy
Buy
Neutral
Buy
Buy
Buy
Neutral
Buy
Buy
1,989
514
1,214
1,235
326
578
619
1,182
469
2,518
1,487
1,905
151
390
547
488
48.8
3.8
7.3
3.0
3.5
0.5
2.8
4.1
4.2
20.7
3.5
1.8
4.4
2.3
0.4
0.7
25.8
13.1
13.5
24.8
65.8
17.5
16.6
17.1
32.3
54.1
23.9
18.9
22.3
9.1
28.5
14.7
17.6
11.4
11.2
18.8
54.6
15.3
13.6
9.9
23.0
40.4
22.1
13.8
16.2
8.7
22.3
11.1
14.2
9.6
9.2
14.1
45.6
13.1
9.4
8.4
17.9
30.3
18.5
11.6
10.9
8.0
17.8
8.8
4.2
2.1
4.0
3.3
19.3
2.8
2.2
2.1
3.1
8.9
4.5
2.3
2.4
2.0
4.2
1.9
2.9
1.8
3.4
2.9
15.9
2.4
2.0
1.8
2.8
7.5
3.8
2.0
2.2
1.7
3.7
1.6
2.5
1.6
2.9
2.5
13.1
2.0
1.7
1.5
2.5
6.1
3.2
1.7
1.8
1.5
3.2
1.4
1.9
1.3
3.5
1.6
2.5
2.2
1.2
2.2
1.9
3.6
3.0
2.8
1.7
5.5
4.1
1.6
2.0
1.3
3.3
1.5
2.5
2.2
1.2
3.2
2.3
3.6
2.6
3.2
1.9
5.4
4.1
1.6
2.0
1.4
3.1
1.4
2.5
2.3
1.4
3.2
2.4
3.6
2.6
3.3
2.3
5.4
4.1
1.6
18.6
17.0
30.7
14.3
32.6
16.9
14.1
13.2
10.5
20.7
20.8
12.7
13.4
24.1
21.2
13.4
17.5
17.2
33.2
16.5
31.9
16.7
15.4
19.7
12.9
20.1
18.9
15.5
14.1
21.4
17.7
15.7
17.7
17.8
34.3
19.1
31.4
16.8
19.5
19.6
15.0
22.2
19.0
16.0
18.3
20.2
19.3
17.1
*Multiples adj. for value of key ventures/Investments; For ICICI Bank and HDFC Ltd BV is adjusted for investments in subsidiaries
20 July 2018
7
 Motilal Oswal Financial Services
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
Total Liabilities
Investments
Change (%)
Advances
Change (%)
Net Fixed Assets
Other assets
Total Assets
E: MOSL Estimates
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
69,012
29,269
39,743
38.4
3,924
398
44,065
39.0
18,991
25,074
44.0
5,429
19,646
6,861
34.9
12,785
42.4
1,347
2017
92,723
38,034
54,690
37.6
7,050
260
61,999
40.7
25,642
36,357
45.0
8,182
28,175
9,810
34.8
18,366
43.6
2,296
2018
118,480
46,216
72,264
32.1
9,000
239
81,503
31.5
32,719
48,783
34.2
10,349
38,434
13,471
35.0
24,963
35.9
2,159
2019E
162,367
62,405
99,962
38.3
12,150
239
112,350
37.8
42,672
69,678
42.8
13,664
56,014
19,941
35.6
36,073
44.5
3,607
(INR Million)
2020E
2021E
220,698
290,147
87,464
117,339
133,233
172,809
33.3
29.7
15,795
20,534
286
344
149,315
193,686
32.9
29.7
56,123
72,497
93,192
121,189
33.7
30.0
19,138
24,879
74,054
96,310
26,363
34,286
35.6
35.6
47,691
62,024
32.2
30.1
4,769
6,202
(INR Million)
2020E
2021E
1,150
1,150
227,609
282,376
228,760
283,526
1,186,437 1,542,368
32.4
30.0
98,835
118,601
1,514,031 1,944,496
41,605
47,846
15.0
15.0
1,438,105 1,869,537
30.0
30.0
4,753
4,778
29,568
22,335
1,514,031 1,944,496
2014
498
39,411
39,909
197,496
50.4
8,776
246,180
282
436.3
229,710
37.2
2,199
13,990
246,180
2015
500
47,497
47,997
266,908
35.1
13,207
328,112
3,323
1,077.9
311,995
35.8
2,492
10,303
328,112
2016
536
73,731
74,266
370,247
38.7
25,216
469,730
10,341
211.2
438,309
40.5
2,870
18,210
469,730
2017
1,094
88,790
89,884
492,497
33.0
54,909
637,289
40,747
294.0
582,394
32.9
3,611
10,537
637,289
2018
1,150
153,645
154,796
644,813
30.9
68,635
868,243
31,460
-22.8
819,433
40.7
4,703
12,648
868,243
2019E
1,150
185,498
186,648
896,050
39.0
82,362
1,165,061
36,179
15.0
1,106,235
35.0
4,728
17,920
1,165,061
20 July 2018
8
 Motilal Oswal Financial Services
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)
EPS (INR)
EPS Growth (%)
Price-Earnings (x)
Dividend per Share (INR)
Dividend Yield (%)
E: MOSL Estimates
2014
19.1
9.6
9.5
11.2
2015
18.9
9.7
9.2
10.6
2016
18.4
9.2
9.2
10.6
2017
18.2
8.8
9.4
10.7
2018
16.9
8.1
8.8
10.3
2019E
16.9
8.1
8.8
10.4
2020E
17.3
8.4
8.9
10.5
2021E
17.5
8.6
8.9
10.4
19.5
3.4
3.5
41.5
9.7
20.4
3.1
3.2
43.9
8.3
20.9
3.2
3.3
42.4
8.9
22.4
3.3
3.5
41.0
11.4
20.4
3.3
3.5
39.0
11.0
21.1
3.5
3.7
38.4
10.8
23.0
3.6
3.7
39.6
10.6
24.2
3.6
3.7
40.4
10.6
46.0
29.6
45.1
31.6
43.1
33.2
41.4
36.3
40.1
44.5
38.0
47.8
37.6
49.1
37.4
49.4
116.3
0.3
21.0
18.0
2014
69
12.5
21.6
1.4
116.9
0.5
18.0
14.2
2015
83
15.6
24.9
1.6
118.4
0.3
19.5
16.1
2016
129
22.2
42.4
2.3
118.3
0.4
20.3
14.6
2017
156
16.1
31.9
43.6
78.8
4.0
0.2
127.1
0.4
24.7
19.7
2018
269
9.4
43.4
35.9
58.0
3.8
0.1
123.5
0.4
22.6
17.6
2019E
325
7.8
62.7
44.5
40.1
6.3
0.2
121.2
0.4
21.6
16.6
2020E
398
6.3
82.9
32.2
30.4
8.3
0.3
121.2
0.5
20.8
15.8
2021E
493
5.1
107.8
30.1
23.3
10.8
0.4
20 July 2018
9
 Motilal Oswal Financial Services
Bajaj Finance
Corporate profile: Bajaj Finance
Company description
Bajaj Finance is a subsidiary of Bajaj Finserv, which
holds 55% 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 digital financing and is a large player in
loan against property segment.
Exhibit 10: Sensex rebased
Exhibit 11: Shareholding pattern (%)
Jun-18
Promoter
DII
FII
55.1
8.8
20.4
Mar-18
55.1
9.0
20.0
Jun-17
57.9
5.9
19.1
17.1
Exhibit 12: Top holders
Holder Name
Government of Singapore
Maharashtra scooters limited
Axis mutual fund trustee limited a/c axis
SBI arbitrage opportunities fund
% Holding
3.6
3.3
1.4
1.1
Others
15.6
15.9
Note: FII Includes depository receipts
Exhibit 13:
Top management
Name
Rahul Bajaj
Nanoo Pamnani
Sanjiv Bajaj
Rajeev Jain
Anant Damle
Designation
Chairman
Vice Chairman
Vice Chairman
Managing Director
Company Secretary
Exhibit 14: Directors
Name
Rahul Bajaj
Nanoo Pamnani*
Sanjiv Bajaj
Rajeev Jain
D S Mehta*
Dipak Poddar*
Gita Piramal*
*Independent
Name
Omkar Goswami*
Ranjan Sanghi*
D J Balaji Rao*
Rajendra Lakhotia*
Rajiv Bajaj
Madhur Bajaj
Exhibit 15: Auditors
Name
S R B C & Co LLP
Shyamprasad D Limaye
Type
Statutory
Secretarial Audit
Exhibit 16: MOSL forecast v/s consensus
EPS
(INR)
FY19
FY20
FY21
MOSL
forecast
62.7
82.9
107.8
Consensus
forecast
62.9
83.4
113.0
Variation
(%)
-0.4
-0.5
-4.6
20 July 2018
10
 Motilal Oswal Financial Services
Bajaj Finance
NOTES
20 July 2018
11
 Motilal Oswal Financial Services
Explanation of Investment Rating
Investment Rating
BUY
SELL
NEUTRAL
UNDER REVIEW
NOT RATED
*In case the recommendation given by the Research Analyst becomes inconsistent with the investment rating legend, the Research Analyst shall within 28 days of the inconsistency, take appropriate measures to make the recommendation consistent with the investment rating legend.
Expected return (over 12-month)
>=15%
< - 10%
> - 10 % to 15%
Rating may undergo a change
We have forward looking estimates for the stock but we refrain from assigning recommendation
Bajaj Finance
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Analyst ownership of the stock
Bajaj Finance
No
20 July 2018
12