Bajaj Finance Ltd

#NSE0057– Bajaj Finance Ltd has a market capitalization of ₹4,17,080 crores and a stock price-to-earnings (P/E) ratio of 28.9. This indicates that investors are willing to pay approximately 28.9 times the company’s earnings per share (EPS) for its stock.

• Promoters hold 54.69% of the company’s shares.
• Foreign Institutional Investors (FIIs) hold 20.55%.
• Domestic Institutional Investors (DIIs) hold 14.33%.
• The Public holds 10.19%

The lead financial indicators for Q4 FY24 for Bajaj Finance Ltd are as follows:

1. Assets Under Management (AUM): AUM increased by 34% to ₹330,615 crore compared to ₹247,379 crore as of 31 March 2023. This indicates significant growth in the company’s managed assets over the year.
2. New Loans Booked: In Q4 FY24, new loans booked increased by 4% to 7.87 million (MM) compared to 7.56 MM in Q4 FY23. However, it’s worth noting that there was a decrease in new loans booked by approximately 0.8 MM in Q4 and 1.2 MM in FY24 due to restrictions imposed by the Reserve Bank of India (RBI) on sanctioning and disbursing loans under the ‘eCOM’ and ‘Insta EMI Card’ categories.

Here are additional key metrics for Bajaj Finance Ltd in Q4 FY24:

1. New Customer Addition: The company added 3.23 million (MM) new customers to its franchise during Q4 FY24, bringing the total customer franchise to 83.64 MM as of 31 March 2024. This indicates significant customer acquisition during the period.
2. Cross-Sell Franchise: The cross-sell franchise crossed a milestone, reaching 50.75 MM during Q4 FY24. This indicates the company’s success in offering additional products or services to its existing customer base.
3. Expansion: In Q4 FY24, the company expanded its geographical presence by adding 53 new locations and 7,700 distribution points. As of 31 March 2024, the company’s geographic presence stood at 4,145 locations and over 198,000 active distribution points. This expansion strategy suggests a focus on increasing accessibility and reaching a wider customer base.
4. Liquidity Buffer: The liquidity buffer stood at ₹15,668 crore as of 31 March 2024. This indicates the amount of liquid assets the company holds to meet its short-term obligations and manage any unforeseen liquidity needs.
5. Cost of Funds: In Q4 FY24, the cost of funds was 7.86%, representing a 10 basis points (bps) increase over Q3 FY24. This metric measures the average cost at which the company borrows funds to finance its operations.
6. Deposits Book: The deposits book grew by 35% year-on-year (YoY) and reached ₹60,151 crore as of 31 March 2024. In Q4, the net deposit growth was ₹2,143 crore. Deposits contributed to 21% of consolidated borrowings as of 31 March 2024. This indicates the company’s reliance on deposits as a funding source and its success in attracting deposits from customers.
7. Net Interest Income (NII): In Q4 FY24, the net interest income grew by 28% to ₹8,013 crore compared to ₹6,254 crore in Q4 FY23. NIM (Net Interest Margin) compression in Q4 over Q3 was 21 basis points (bps), primarily due to changes in the composition of Assets Under Management (AUM).
8. Net Total Income: Net total income grew by 25% to ₹9,714 crore in Q4 FY24 compared to ₹7,775 crore in Q4 FY23.
9. Operating Expenses (Opex) to Net Total Income Ratio: In Q4 FY24, Opex to Net total income improved to 34.0% compared to 34.2% in Q4 FY23. The company implemented various GenAI initiatives across operations, service, and contact centers to enhance operating efficiencies.
10. Employee Headcount: As of 31 March 2024, the employee headcount stood at 53,782 (including Bajaj Finance Limited, Bajaj Housing Finance Limited, and Bajaj Financial Securities Limited). The employee headcount reduced by 499 in Q4 FY24. Attrition for FY24 was reported at 14.9% compared to 18.7% for FY23. This indicates efforts towards optimizing workforce efficiency and managing attrition rates within the organization.
11. Loan Losses and Provisions: In Q4, loan losses and provisions amounted to ₹1,310 crore. The Rural B2C business continued to experience elevated loan losses during the quarter. The growth of Assets Under Management (AUM) for Rural B2C (excluding Gold loans) has been reduced from 25% in March 2023 to 6% in March 2024.
13. Loan Loss to Average AUF: The loan loss to average Assets Under Finance (AUF), excluding management overlay, was 1.86% in Q4.
14. Management and Macro-Economic Overlay: As of 31 March 2024, the company holds a management and macro-economic overlay of ₹300 crore. During the quarter, ₹127 crore was utilized towards strengthening the Expected Credit Loss (ECL) model, and ₹163 crore was released towards loan losses and provisions.
15. Gross Non-Performing Assets (GNPA) and Net Non-Performing Assets (NNPA): As of 31 March 2024, GNPA and NNPA stood at 0.85% and 0.37%, respectively, compared to 0.94% and 0.34% as of 31 March 2023. These figures are amongst the lowest in the industry.
16. Risk Metrics: Risk metrics across all businesses were stable except for the Rural B2C business. The company remains vigilant regarding risk management actions in the Rural B2C segment.
17. Consolidated Pre-Provisioning Operating Profit: Consolidated pre-provisioning operating profit grew by 25% to ₹6,412 crore in Q4 FY24.
18. Consolidated Profit Before Tax: Consolidated profit before tax increased by 20% to ₹5,105 crore in Q4 FY24. However, the profit before tax for Q4 was lower by approximately 4% due to regulatory restrictions on sanction and disbursal of loans under ‘eCOM’ and ‘Insta EMI Card’.
19. Consolidated Profit After Tax: Consolidated profit after tax grew by 21% to ₹3,825 crore in Q4 FY24.
20. Return on Assets (ROA): In Q4 FY24, the company delivered an annualized ROA of 4.84%, compared to 5.40% in Q4 FY23. ROA measures the company’s efficiency in generating profits from its assets.
21. Return on Equity (ROE): In Q4 FY24, the company delivered an annualized ROE of 20.48%, compared to 23.94% in Q4 FY23. ROE measures the company’s profitability relative to its shareholder equity.
22. Capital Adequacy: Capital adequacy remained strong at 22.52% as of 31 March 2024, with Tier-1 capital at 21.51%. This indicates the company’s ability to absorb potential losses and meet regulatory capital requirements.

Disclaimer-

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