Bajajfinsv vs TATA CONSUMER PRODUCTS Q1 FY25

Bajaj Finserv reported a mixed Q1 FY25. Consolidated PAT grew 10% YoY to INR 2,138 crore, but excluding one-offs, growth was 8%. Revenue rose 35% to INR 31,480 crore. BAGIC posted strong GWP growth of 24% to INR 4,761 crore, though combined ratio worsened to 103.7% due to large commercial claims. BALIC's individual rated new business grew 26%, but PAT fell 37% due to new business strain. Bajaj Finance resumed eCom and Insta EMI card issuance post-RBI embargo. Emerging businesses' losses widened to INR 119 crore. Management highlighted margin pressure from regulatory changes and elevated loan losses, but expects improvement in H2. Key risk: elevated credit costs and collection efficiency in BFL's rural portfolio.

Guidance read

BAGIC expects combined ratio to normalize in subsequent quarters: Management indicated that large commercial claims in Q1 are one-offs and not expected to recur, with combined ratio likely improving. BALIC margins may see a pause in expansion this year due to surrender regulations: New surrender value norms could temporarily impact margin expansion, but medium-term expansion expected through product filings and cost optimization. BFL expects collection efficiency to improve in H2: Steps taken to strengthen collections and slow rural B2C business should yield results in the second half of FY25. Bajaj Finserv Health to provide long-term plan in 6-9 months: Post-Vidal acquisition, management will outline a complete long-range plan including breakeven visibility within 6-9 months.

Risk read

Key risks include Elevated loan losses and collection efficiency in BFL — BFL's loan losses and provisions were elevated in Q1 due to muted collection efficiencies and increase in stage 2 assets by INR 864 crore.; Impact of new surrender regulations on BALIC margins — New IRDA surrender value norms may temporarily slow margin expansion; management was evasive on quantifying the impact.; Large commercial claims in BAGIC may recur — Though termed one-offs, large property and liability claims caused combined ratio deterioration; similar claims could arise in future.; Vidal acquisition may lead to customer attrition — Insurance partners of Vidal may withdraw business due to conflict of interest with Bajaj Finserv's insurance arms..

Promise ledger

Of 3 tracked promises, management 0 met, 0 close, 3 missed.

Tata Consumer Products reported a mixed Q1 FY25. Consolidated revenue grew 16% to INR 4,352 crore, with organic growth of 10% and acquisitions adding 6%. EBITDA rose 23% to INR 671 crore, with margin expansion of 80 bps to 15.4%. India Beverages grew only 6% (1% organic) as intense summer hurt hot tea and out-of-home NourishCo volumes. India Foods continued strong momentum with 30% revenue growth (14% organic, 10% volume). International business grew 10% (8% constant currency) with EBIT up 46%. PAT fell 14% to INR 289 crore due to higher amortization (INR 55 crore) and interest costs from bridge financing. Management highlighted integration of Capital Foods and Organic India is on track, with combined gross margins of 48.4%. Growth businesses (including acquisitions) now form 29% of India portfolio. Key risk: sustained high tea and coffee prices could pressure margins if not passed through.

Guidance read

Growth businesses to reach 30% of India portfolio: Management reiterated commitment to grow the growth businesses (including acquisitions) from 20% to 30% of the India portfolio, with these businesses growing at 30% CAGR. Organic India integration to complete in 100 days: Management committed to completing the integration of Organic India within 100 days from the April 16 closure, and is on track. Capital Foods integration largely complete: Integration of Capital Foods, including channel inventory cleanup, is complete and run rate is trending as expected. Rights issue to repay bridge debt: The rights issue, expected to close on August 19, will be used to repay short-term bridge financing of INR 3,000 crore raised for acquisitions.

Risk read

Key risks include Sustained high tea and coffee prices — North Indian tea prices are up 15-20% and coffee prices (Robusta) up ~50% from two quarters ago, which could pressure margins if not passed through.; NourishCo underperformance due to heatwave and tactical missteps — NourishCo revenue grew only 7% due to intense summer impacting out-of-home consumption and delayed tactical pricing actions, raising concerns about the business's resilience.; Integration disruptions at Organic India — Organic India deal closed on April 16, and inventory consolidation took longer than expected, potentially impacting near-term revenue and margins.; Amortization and interest costs weighing on PAT — Quarterly amortization of INR 55 crore from acquisitions and higher interest costs from bridge financing are depressing reported PAT, with no near-term relief expected..

Promise ledger

Of 3 tracked promises, management 0 met, 0 close, 3 missed.