Bajaj Finance Ltd — Q2 FY24
Bajaj Finance reported a strong Q2 FY24 with PAT of ₹3,551 crore, up 28% YoY, driven by robust AUM growth of 33% to ₹290,664 crore and disciplined cost management.
bullish
high
✓ Verified against BSE filing
Claim Ledger
Did management answer the analysts?
Every material analyst question, graded on whether management actually answered it — with the verbatim exchange and quantitative claims checked against filed numbers.
64%Questions answered2Evaded / deflected11Questions audited
Partial answer
High priority
Update on rural B2C leverage analysis and portfolio actions taken.
Asked by Antariksha Banerjee, ICICI Prudential
Management shared directional data but could not publish the full analysis due to bureau constraints.
could not publish full datashared high-level trends instead
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Question
One is, you know, starting from the point that the rural B2C is still flagging red, and I think last quarter we had spoken about some analysis that we were conducting on the leverage of customers and how that's moved. Any update you would want to share on that and any portfolio actions that you have updated since then?
Rajeev Jain, Managing Director
So we wanted to really publish. We are ready, but principally, bureau technically did not allow us to publish that, rightfully so. But we can share some update. ... So what we have done is we've cut between 8%-14% of the business in urban and rural, 14% in rural and 8% in urban, as a preventive measure.
Answered
High priority
Are larger ticket loans less problematic despite fast growth?
Asked by Antariksha Banerjee, ICICI Prudential
Management provided specific industry and company NPL data for larger tickets, confirming lower risk.
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Question
Based on this exercise, do you conclude that the larger ticket, INR 8 lakh+ or even maybe the INR 5 lakh+, if it is more overlapping with our customer base, despite having grown so fast, is relatively less of a problem, at least at that point?
Rajeev Jain, Managing Director
So if you look at 8 lakh +, in FY 2020, the number looked like 291 basis points. ... FY 2023 is looking at 115 basis points. This is industry. ... We were 28 basis points, in FY 2020 we were 31 basis points, and we are at 18 basis points. So yeah, we do conclude that adjusted for less than 50,000, numbers in general of greater than 50,000 are looking lower than FY 2020.
Evasive
Medium priority
Plans for utilizing capital raise in mortgage vs non-mortgage.
Asked by Antariksha Banerjee, ICICI Prudential
Management did not provide a specific split of capital allocation between mortgage and non-mortgage.
no specific allocation givendeferred to future
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Question
This is regarding the capital raise. I just wanted to understand what are your plans of utilizing this capital in the mortgage business versus the non-mortgage side of the business, especially given the fact that the housing business is supposed to live separately as per regulations?
Rajeev Jain, Managing Director
I mean, you know, so principally, that listing is eight-nine quarters away. ... we are prudent allocators of capital. ... those who generate the sustainable return on equity would get capital for all our lines of business.
Evasive
Low priority
Can leverage data be published next quarter after capital raise?
Asked by Viral Shah, IIFL Securities
Management did not commit to publishing the data, only said they would try to work with the bureau.
no commitmentdeflected to bureau
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Question
Is it possible to do that, if not now, but maybe next quarter once the capital raise is done, if that is a constraint for putting out the data in terms of leverage at the customer end?
Rajeev Jain, Managing Director
We'll try and work closely with the bureau because it will be, we are not the constraint. We'll work with the bureau and try and assist.
Answered
Medium priority
Timeframe to reach 60% housing mix in BHFL.
Asked by Viral Shah, IIFL Securities
Management gave a clear timeline and current status, answering the question fully.
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Question
What is the timeframe over which you have to reach 60%?
Atul Jain, Managing Director, Bajaj Housing Finance Limited
Regulatorily, we are required to have a 60% asset mix by 31st March 2024. ... as of 30th December, we are at 59.01. ... Our attempt would be that before, up to 31st December, which is Q3 itself, we should be reaching that number of 60%.
Answered
Medium priority
Is Stage 2 to Stage 3 shift due to day-count anomaly?
Asked by Viral Shah, IIFL Securities
Management confirmed the phenomenon and explained the technical reason, answering the question directly.
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Question
So this is the phenomenon that you were referring to earlier, right? Nothing incrementally to read into it?
Sandeep Jain, CFO
This is exactly, thing that we are referring to. ... The customers were stuck because of daily, day overdue logic into Stage Two in the last quarter. And because of 92-day quarter, these customers have moved from 89 days to over 90 days in the current quarter.
Partial answer
High priority
Why are rural B2C and SME treated differently despite similar NPLs?
Asked by Piran Engineer, CLSA
Management explained the current stance but did not directly answer whether SME/urban B2C would slow down.
no explicit forward guidance on SME/urban B2C slowdown
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Question
I just wanted to understand why we treat them as different in terms of our outlook. ... will we expect it to slow down in SME and urban B2C next quarter onwards?
Rajeev Jain, Managing Director
It's purely data dependent. ... The greens and the yellows and the reds are management assurance. ... If you go to urban B2C, you see our Stage Two at 143 basis points and 95 basis points, whereas here, it's 109 basis points and 141 basis points.
Answered
Medium priority
Details on LRD book composition and safety.
Asked by Piran Engineer, CLSA
Management provided detailed composition and safety features, answering the question fully.
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Question
Can you just give us some more color on the book in terms of, you know, how much of it is, say, malls versus offices, or who the type of landlords are, et cetera?
Sandeep Jain, CFO
So I'll give you the complete picture. ... we generally don't do retail malls. We do generally a Grade A commercial. ... 100% of the portfolio largely would be Grade A commercial. ... Lessees are all largely Fortune 500 companies, and all cash flows are escrowed.
Answered
High priority
NIM guidance: 30 bps compression due to cost of funds?
Asked by Abhishek Murarka, HSBC
Management confirmed the compression and explained the drivers, answering the question directly.
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Question
So you said another 30 bps of compression to go, mostly due to an increase in cost of funds, and pretty much unlikely that, you'll see any kind of yield compression here?
Sandeep Jain, CFO
We believe cost of fund is heading, northward. ... replacement of old, monies that get borrowed for two-year and three-year at very, very low price. They are coming from maturity and renewal. ... I think it'll peak out by Q4.
Evasive
Medium priority
How much of OpEx is discretionary and can be cut?
Asked by Abhishek Murarka, HSBC
Management did not quantify discretionary OpEx, only gave a fixed percentage and a philosophical stance.
no specific number givenphilosophical answer
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Question
What is the extent of the discretionary, discretionary element? So out of, let's say, quarterly INR 3,000 crore kind of, you know, amount, how much is discretionary, which you can run down?
Rajeev Jain, Managing Director
Look, we... I keep saying to people, we are an entrepreneurial company. If I don't want to spend the money, I don't want to spend the money. I mean, 45% is fixed, right? That's compensation, right? That's salaries.
Partial answer
Medium priority
Outlook on strategic investments and quantum going forward.
Asked by Kuntal Shah, Oaklane Capital Management
Management gave a qualitative answer (one investment a year) but did not provide a specific quantum.
no specific quantum given
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Question
Given the 24% hurdle, what's your view and outlook? And more importantly, what is the quantum of investment we as investors can expect going ahead?
Rajeev Jain, Managing Director
One investment a year is really what we think we can, we can consume, absorb, or work with. So that's really how. ... we'll remain very prudent in the way we make investments.
Partial answer
High priority
Confidence in exceeding 29-31% growth guidance?
Asked by Kunal Shah, Citigroup
Management confirmed confidence in existing guidance but did not say they would exceed it.
did not confirm exceeding guidance
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Question
Are we more confident that, maybe compared to like 29%-31% guidance, which we had given in the last quarter, we should be much more than that?
Rajeev Jain, Managing Director
We'll take a year at a time. So clearly, can I say, given the strong momentum in the first half of the year, we're pretty confident of the year? The answer is yes. The long-term guidance that we provided, do we remain confident of delivering that? The answer is yes.