Bajaj Finance Ltd Q2 FY23 Earnings Conference Call Insights

Key highlights from Bajaj Finance Ltd (BAJFINANCE) Q2 FY23 Earnings Concall

Q&A Highlights:

• [00:25:36] Hardik Shah of Goldman Sachs enquired about the number of employees in the recovery and collection channel of the total 39,423 headcount for BAJFINANCE. Rajeev Jain MD answered that it’s just a tad below 9,500 people.

• [00:25:58] Hardik Shah of Goldman Sachs also asked about growth plans for next few years with the inclusion in the upper layer category of NBFCs. Rajeev Jain MD replied that BAJFINANCE doesn’t foresee any change in the growth outlook as a company.

• [00:26:50] Saurabh Bajaj from J.P. Morgan enquired about subvention market share behavior at the store. Rajeev Jain MD said that the company is doing everything to defend its market share. The company added that as the lender numbers increased from 4 to 16, BAJFINANCE has lost some share.

• [00:26:58] Saurabh Bajaj with J.P. Morgan asked about the average ticket size of loans syndicated on the mall side. Rajeev Jain MD answered that average ticket size doesn’t change and the company still doesn’t offer smaller accessories.

• [00:29:41] Saurabh Bajaj of J.P. Morgan asked that from where the company saw market share loss, if it’s from fintechs or banks. Rajeev Jain MD said that the company is not seeing fintechs, but it’s mostly lenders.

• [00:30:23] Sameer Bhise with JM Financial queried about overshooting the guided range of ROA and ROE for last three quarters.  Rajeev Jain MD answered that BAJFINANCE wants to compound and deliver a 19-21% ROE on a sustainable basis. BAJFINANCE is going through a super normal profitability zone of lower interest rates, stronger momentum and lower credit cost currently.

• [00:40:58] Umang Shah from Kotak Mutual Fund asked that in the context of digital expansion, how relevant is geo expansion for BAJFINANCE. Rajeev Jain MD clarified that it’s very economic and added that the company will remain omnipresent only. Cash and debt management infrastructure will remain relevant as long as BAJFINANCE is in credit business.

• [00:45:01] Piran Engineer with CLSA enquired about BAJFINANCE home loan strategy, with rates offered 30, 40 bps lower than competitors.  Rajeev Jain MD answered that home loans is as much psychology business as it’s business.

• [00:49:31] Piran Engineer with CLSA asked about the app business metrics of 100,000 for 2Q23. Sandeep Jain CFO clarified that 100,000 are the number of customers who have procured digital EMI card from the app. Of the total 664,000, 100,000 came from the app and 564,000 came through web, which is all digital.

• [00:51:55] Nidhesh Jain of Investec enquired about the yield on urban B2C and rural B2C portfolios. Rajeev Jain MD said that BAJFINANCE don’t publish effective yield because that may change. At a fundamental level, if the mix change of the cohort, the net yield on that would change.

• [00:57:31] Shweta Daptardar from Elara Capital asked about the modus operandi behind adding, on an avg., 20 odd branches every quarter. Rajeev Jain MD said that one should expect to see more infrastructure rollout in this space over the next 6-8 months. The reason is that fundamentally it’s reached a point where principally it cannot sit in the existing branch.