{"id":160615,"date":"2024-04-26T11:44:43","date_gmt":"2024-04-26T15:44:43","guid":{"rendered":"https:\/\/44.250.171.167\/?p=160615"},"modified":"2024-04-26T11:44:45","modified_gmt":"2024-04-26T15:44:45","slug":"bajaj-finance-ltd-q4-fy24-earnings-conference-call-insights","status":"publish","type":"post","link":"https:\/\/alphastreet.com\/india\/bajaj-finance-ltd-q4-fy24-earnings-conference-call-insights\/","title":{"rendered":"Bajaj Finance Ltd Q4 FY24 Earnings Conference Call Insights"},"content":{"rendered":"<p><strong>Key highlights from Bajaj Finance Ltd (BAJFINANCE) Q4 FY24 Earnings Concall<\/strong><\/p>\n<ul>\n<li><strong>AUM Growth<\/strong>\n<ul>\n<li>FY24 delivered record AUM growth of INR 83,236 crores, 34% YoY.<\/li>\n<li>Q4 AUM growth was INR 19,647 crores.<\/li>\n<li>Growth driven by 36.2 million loans disbursed and 14.5 million new customers added in FY24.<\/li>\n<li>BHFL (housing finance subsidiary) AUM grew 32% YoY.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Operating Metrics<\/strong>\n<ul>\n<li>Opex to total income ratio remained stable at 34% for last three quarters.<\/li>\n<li>Net Interest Income grew 28% YoY.<\/li>\n<li>NIM compression of 21 bps QoQ due to change in AUM composition.<\/li>\n<li>Employee headcount optimized, reducing by 499 in Q4.<\/li>\n<li>Attrition improved to 14.9% from 18.7% last year.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Asset Quality<\/strong>\n<ul>\n<li>Gross NPA at 0.85% and Net NPA at 0.37% &#8211; lowest ever.<\/li>\n<li>Overall portfolio risk metrics stable except rural B2C business.<\/li>\n<li>Rural B2C AUM growth slowed to 6% from 25% to contain risk.<\/li>\n<li>Loan losses of 1.86% of average AUM in Q4.<\/li>\n<li>Macro provision overlay of INR 300 crores in Q4.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Profitability<\/strong>\n<ul>\n<li>PAT grew 21% YoY to INR 3,825 crores in Q4.<\/li>\n<li>FY24 PAT up 26% to INR 14,451 crores.<\/li>\n<li>Q4 ROA at 4.54% and ROE at 20.48%.<\/li>\n<li>Capital adequacy at 22.52%, Tier 1 at 21.51%.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Other Updates<\/strong>\n<ul>\n<li>Evaluating IPO for housing finance subsidiary BHFL.<\/li>\n<li>Raised $725 million in ECBs to diversify borrowings.<\/li>\n<li>Key Fact Statements implemented across all lending from Apr&#8217;24.<\/li>\n<\/ul>\n<\/li>\n<li><strong>FY25 Outlook<\/strong>\n<ul>\n<li>Expect to add 12-14 million new customers similar to 14.5 million in FY24.<\/li>\n<li>AUM growth projected at 26-28%, driven by new secured product launches.<\/li>\n<li>NIM expected to moderate by 30-40 bps over next two quarters before stabilizing.<\/li>\n<li>Opex to NIM ratio to improve by 20-40 bps from current levels.<\/li>\n<li>Credit costs forecast within 175-185 bps range, similar to pre-COVID.<\/li>\n<li>ROA to remain within long-term guidance of 4.6-4.8%.<\/li>\n<li>ROE may see marginal decline due to capital raise.<\/li>\n<li>GNPA and NNPA expected at 85-100 bps, lower than guidance.<\/li>\n<li>Profitability growth rear-ended due to NIM moderation in H1.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Asset Mix and Quality<\/strong>\n<ul>\n<li>Unsecured book reduced by 2.2% as share of urban\/rural B2C declined.<\/li>\n<li>Rural B2C share down 140 bps as planned amid portfolio risks.<\/li>\n<li>Commercial lending and two\/three-wheeler books grew their share.<\/li>\n<li>Increasing product granularity as per strategic objectives.<\/li>\n<li>GNPA and NNPA remained range-bound qoq with minor movements.<\/li>\n<li>Overall portfolio quality comfortable, moving towards pre-COVID metrics.<\/li>\n<li>GNPAs\/NNPAs still better than pre-COVID after adjusting for regulations.<\/li>\n<\/ul>\n<\/li>\n<li><strong>International Listing Plans<\/strong>\n<ul>\n<li>Company will evaluate the prospect of listing via ADR\/GDR route.<\/li>\n<li>Currently no firm plans, but will assess and update based on evaluation.<\/li>\n<li>Some leading Indian firms already listed internationally.<\/li>\n<\/ul>\n<\/li>\n<li><strong>New Business Profitability<\/strong>\n<ul>\n<li>Targets INR 1,000 crore profit for gold loan and broking businesses.<\/li>\n<li>Gold loans could reach this in 3-4 years if current trajectory continues.<\/li>\n<li>Broking business (BFSL) expected to see three-digit profit growth this year.<\/li>\n<li>But INR 1,000 crore profit is long-term target, taking time to build scale.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Credit Cost Guidance<\/strong>\n<ul>\n<li>75-1.85% guidance factors in gradual secured mix shift.<\/li>\n<li>Also incorporates accelerated write-off policies impacting 10-12 bps.<\/li>\n<li>Write-offs to remain elevated as per disclosures on provisions.<\/li>\n<li>Full benefit of secured mix to reflect only from FY26-27.<\/li>\n<\/ul>\n<\/li>\n<li><strong>BHFL Outlook<\/strong>\n<ul>\n<li>NIM compression due to intense competition in mortgage lending.<\/li>\n<li>But targets sustainable 13-15% ROE range for housing finance business.<\/li>\n<li>Aims to create large, low-risk annuity franchise growing 25-27% annually.<\/li>\n<\/ul>\n<\/li>\n<li><strong>New Product Offerings<\/strong>\n<ul>\n<li>Account aggregator is a fundamental shift, allowing better underwriting and monitoring.<\/li>\n<li>Bajaj has 22% of India&#8217;s account aggregator consents on a monthly basis.<\/li>\n<li>ONDC will improve customer engagement, with orders growing sharply y-o-y.<\/li>\n<li>Social commerce and rewards program are medium-term bets to transform the business.<\/li>\n<\/ul>\n<\/li>\n<li><strong>BHFL Listing Impact and Product Strategy<\/strong>\n<ul>\n<li>Post BHFL listing, long-range guidance to be provided for both entities separately.<\/li>\n<li>Aim is to make subsidiaries more self-sufficient across key metrics.<\/li>\n<li>But no plans for BFL and BHFL to directly compete in major product lines.<\/li>\n<li>Developer finance used as strategic tool and return enhancer for home loans.<\/li>\n<li>To be capped at 12-15% of AUM as guided.<\/li>\n<li>LRD to be aggressive focus area alongside home loans for mandatory mix.<\/li>\n<li>Competing well with banks for marquee LRD clients.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Rural Expansion Approach<\/strong>\n<ul>\n<li>Will accelerate rural B2C growth once risk metrics fully normalize.<\/li>\n<li>New segments like gold\/MFI similar models, but gradual expansion planned.<\/li>\n<li>Not deviating from diversified product strategy despite challenges.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Key highlights from Bajaj Finance Ltd (BAJFINANCE) Q4 FY24 Earnings Concall AUM Growth FY24 delivered record AUM growth of INR 83,236 crores, 34% YoY. Q4 AUM growth was INR 19,647 crores. Growth driven by 36.2 million loans disbursed and 14.5 million new customers added in FY24. BHFL (housing finance subsidiary) AUM grew 32% YoY. Operating [&hellip;]<\/p>\n","protected":false},"author":1767,"featured_media":154818,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[9825,392,1],"tags":[10169,10097,10390],"class_list":["post-160615","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-earnings-call-highlights","category-earnings","category-finance-stocks","tag-earnings","tag-financial-service","tag-retail-loan"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/alphastreet.com\/india\/wp-content\/uploads\/2023\/10\/CC_Image_1.jpg","jetpack_likes_enabled":false,"jetpack-related-posts":[{"id":160546,"url":"https:\/\/alphastreet.com\/india\/axis-bank-ltd-q4-fy24-earnings-conference-call-insights\/","url_meta":{"origin":160615,"position":0},"title":"Axis Bank Ltd Q4 FY24 Earnings Conference Call Insights","author":"Praveen","date":"April 25, 2024","format":false,"excerpt":"Key highlights from Axis Bank Ltd (AXISBANK) Q4 FY24 Earnings Concall Deposit Franchise Strengthening Focused on improving deposit quality and strength over the past couple of years. 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