Bajajfinsv vs TATA CONSUMER PRODUCTS Q4 FY24

Bajaj Finserv reported a strong Q4 FY24 with consolidated total income up 36% YoY to INR 32,042 crore and PAT up 20% to INR 2,119 crore. The general insurance arm (BAGIC) grew gross written premium 32% YoY, significantly outpacing industry growth of 10.9%, though the combined ratio weakened to 101.6% from 97.3% due to higher claims. Life insurance (BALIC) delivered individual rated premium growth of 17% on a high base, with NBV up 16% to INR 480 crore. Bajaj Finance continued its robust performance with 25% revenue growth and 21% PAT growth. Management highlighted market share gains in both insurance businesses and expressed optimism about sustained growth driven by favorable macros and regulatory tailwinds. Key risks include competitive intensity in motor insurance, potential regulatory changes on surrender charges, and the cyclical nature of tender-driven government health and crop businesses.

Guidance read

BAGIC to maintain above-market growth with balanced profitability: Management expects continued market share gains driven by distribution expansion and prudent underwriting, but no specific growth target given. BALIC to grow faster than industry with improving margins: Directionally, NBV margins expected to improve due to scale and cost efficiencies, though no specific numbers provided. Bajaj Finserv Health to integrate Vidal acquisition in Q1 FY25: Acquisition completed in April 2024; integration and utilization of Vidal network to begin next quarter.

Risk read

Key risks include Motor TP pricing uncertainty — No price hike in motor third-party for years; frequency of accidents rising, and regulatory approval for hike is uncertain, especially in an election year.; Regulatory risk on surrender charges for life insurance — Regulator may reconsider surrender charge regulations; management declined to comment, indicating potential impact on product profitability.; Dependence on tender-driven government health and crop business — Growth in government health and crop is tender-based and pricing-dependent; management may lose share if pricing becomes unfavorable.; Persistency pressure in life insurance from older cohorts — 37th month persistency dropped due to a specific partner bucket; 49th month may also be impacted, though overall persistency improving..

Promise ledger

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

Tata Consumer Products reported a solid Q4 FY24 with consolidated revenue up 9% YoY to INR 3,927 crore, driven by India Foods (up 20% including Capital Foods) and International Business (up 7%). EBITDA grew 22% with margin expansion of 170 bps to 15.3%, aided by international restructuring benefits and cost synergies. India Beverages volumes were flat, but coffee grew 45% in Q4. Growth businesses (NourishCo, Soulfull, Capital Foods) continued strong momentum, growing 40% for the full year. Management guided for mid-single-digit volume growth in tea and continued margin accretion from international operations. Key risks include coffee price volatility impacting US margins and delayed summer affecting NourishCo's seasonal sales. The integration of Capital Foods and Organic India is on track for 100-day completion, with EPS accretion expected by FY27.

Guidance read

Growth businesses to be 30% of India portfolio growing at 30%: With Capital Foods and Organic India, growth businesses (NourishCo, Soulfull, etc.) are expected to account for 30% of India revenue and grow at 30%. Capital Foods integration in 100 days: Capital Foods acquisition closed Feb 1, integration targeted for completion by end of April (100 days). 95% of distributors already billing. Organic India integration in 100 days: Organic India acquisition closed April 16, integration targeted for completion in 100 days. Rights issue to conclude by early Q2 FY25: The rights issue process is on track and expected to conclude by early Q2 FY25.

Risk read

Key risks include Coffee price volatility impacting US margins — Rising Robusta and Arabica prices could pressure US coffee margins if not passed through quickly. Management claims agility but risk remains.; NourishCo growth slowdown due to seasonality — NourishCo missed its INR 900-1000 crore guidance, ending at INR 825 crore, partly due to delayed summer. Size may become a growth constraint.; Tea market share loss may be understated — Management disputes Nielsen data showing 7% industry growth, claiming they haven't lost share. If competitive data confirms loss, tea volumes could remain soft.; Integration risks from multiple acquisitions — Simultaneous integration of Capital Foods and Organic India within 100 days each could strain resources and execution..

Promise ledger

Of 2 tracked promises, management 0 met, 0 close, 2 missed.