5 January 2022

Update | Sector: Financials - NBFC

Bajaj Finance
BSE SENSEX S&P CNX
59,856 17,805 CMP:INR7,343 Buy
Strong sequential AUM growth aided by healthy new
customer acquisitions

Bloomberg BAF IN
 Bajaj Finance (BAF) reported healthy customer acquisition with 2.6m new
Equity Shares (m) 602 customers added during the quarter. Absolute customer acquisition run-rate
M.Cap.(INRb)/(USDb) 4431.8 / 59.4 surpassing pre-COVID levels while the quarterly run-rate growth of the total
52-Week Range (INR) 8020 / 4362 customer franchise was broadly at the same levels as the last four quarters.
1, 6, 12 Rel. Per (%) 0/8/17 Total customer franchise increased to 55.4m (up 4.9% QoQ / 19.6% YoY).
12M Avg Val (INR M) 12278
 New loans booked were up 17% QoQ at 7.4m (v/s 6.04m YoY) and were just
Free float (%) 44.0
4% below the number of new loans book in the festive quarter pre-COVID.
Financials Snapshot (INR b) The share of new customer loans to overall loan originations remained
Y/E March 2021 2022E 2023E largely consistent at ~35% (~37% in previous quarter). This ratio had declined
Net Income 172.7 209.8 255.5 to ~30% in 1QFY21 during the peak of the first COVID wave. While this
PPP 119.6 139.9 169.9
suggests that BAF has been gaining a larger share of its customer wallet, it
PAT 44.2 68.7 100.1
EPS (INR) 73.5 114.2 166.4 also indicates lower risk appetite to lend to newer customers.
EPS Gr. (%) -16.3 55.4 45.7  AUM grew ~8.6% QoQ to INR1.81t (+26% YoY), ahead of our expectations of
BV/Sh. (INR) 606 708 858 6.5% QoQ growth. In our view, the company has witnessed healthy traction
Ratios across product segments (except maybe auto finance where the company
NIM (%) 9.5 10.3 10.3
has been intentionally slowing down). Adjusted for IPO financing,
C/I ratio (%) 30.7 33.3 33.5
RoA (%) 2.6 3.6 4.4
consolidated AUM increased by INR145b in 3QFY22.
RoE (%) 12.8 17.4 21.2  The consolidated liquidity surplus reduced to INR143b (from INR165b QoQ)
Payout (%) 13.6 10.0 10.0 and stood at ~8% of AUM v/s ~10% of AUM in 2QFY22. This suggests that the
Valuations excess liquidity has been deployed for loan-growth leading to lower negative
P/E (x) 99.9 64.3 44.1
carry and which would aid margins. Important to highlight that BAF had
P/BV (x) 12.1 10.4 8.6
Div. Yield (%) 0.1 0.2 0.2
entered 3QFY22 with a higher liquidity position to prepare itself well in
advance for the festive season.
Shareholding pattern (%)
As On
 BAF highlighted that the recent RBI guidelines on NPA recognition should not
Sep-21 Jun-21 Sep-20
Promoter 56.0 56.0 56.1 have any adverse impact on its NPA position, suggesting that the credit costs
DII 9.7 9.3 10.7 for FY22 should then be within guided levels of ~INR43-44b.
FII 23.8 24.2 21.6  Deposits recorded a healthy sequential growth of ~4.5% and were up ~26%
Others 10.4 10.4 11.6 YoY to INR300b.
FII Includes depository receipts  CRAR remained healthy at 27%, and BAF still has the best capital adequacy
among the large NBFCs.
 ~9% QoQ growth in reported AUM suggests disbursement volumes were
encouraging. As highlighted by us earlier, margins in 2HFY22E are likely to
expand as the negative carry from excess liquidity comes off. 3QFY22
business update seems to suggest that there has been a rapid normalization
across business segments and this trajectory could continue in 4QFY22 as
well (even though a major third COVID wave could play a spoiler).

5 January 2022 9
 Share of existing customers increasing suggests that BAF is
Robust new customer acquisitions (surpassed pre-COVID levels) gaining a greater share of the customer wallet
New customers to Bajaj (in '000) YoY Growth (%) New loans Acquired (in '000)
Share of existing customers (%)
256.9 70
2,461

68 70

2,192

2,261
68
66

2,350
1,901

65
1,921

1,219

2,600
64 63
59 59
532

8.6 18.9 18.6

7,400
6,470

7,670

6,030

1,750

3,620

6,040
1,900

6,330
1QFY22 4,600
4QFY21 5,470
(36.6) 92.8
(78.3)

3QFY22
2QFY20

3QFY20

4QFY20

1QFY21

2QFY21

3QFY21

2QFY22
1QFY21

3QFY22
2QFY20

3QFY20

4QFY20

2QFY21

3QFY21

4QFY21

1QFY22

2QFY22
Source: MOFSL, Company Source: MOFSL, Company

AUM up 8.6% QoQ / 26% YoY, implying strong disbursements ~4.5% QoQ growth in deposits exhibits the strength of BAF’s
(adjusted for IPO financing, AUM was up INR145b in 3QFY22) deposits franchise
AUM (INR b) YoY Growth (%) Deposits (INR b)
38
35
1,381

1,529

27
1,371

1,436

26
22
15
7
1 4
(1)
1,355

1,451

1,472

1,669

1,813
1,591

115 111 132 179 176 207 221 201 217 238 258 280 287 300
FY19

FY20

FY21
9MFY20
9MFY19

9MFY21

9MFY22
1QFY22
1QFY20

1QFY21
1HFY19

1HFY20

1HFY21

1HFY22
1QFY21

1QFY22
FY20

9MFY21

FY21
9MFY20

9MFY22
1HFY20

1HFY21

1HFY22

Source: MOFSL, Company Source: MOFSL, Company

5 January 2022 10