Bajaj Finance’s Q1FY14 Results: Another Stellar Performance

Bajaj Finance, which is a part of the well-known Bajaj Group, recently announced its June 2013 quarter results and if the results are anything to go by, the company has once again managed to put up a strong financial performance. Bajaj Finance is a subsidiary of Bajaj Finserv (Financial Services arm of Bajaj Holdings and Investment). 

Bajaj Holdings & Investments holds 39.16% stake in Bajaj Finserv and Bajaj Finerv holds 61.99% stake in Bajaj Finance. Bajaj Finance mainly focuses on consumer lending, SME and commercial lending.

As regards the financial performance of the company, it posted a topline of Rs 928.32 crore and a bottomline of Rs 175.74 core for the June 2013 quarter as against Rs 701.27 crore and Rs 138.69 crore correspondingly in the June 2012 quarter. This results in topline growth of 32.40% and bottomline growth of 26.70%. The company’s financial performance has been good on a sequential basis too, where the topline growth stood at 11.54% and bottomline stood at 7.28%. The best part about the results has been the highest ever bottomline posted by the company on a quarterly basis. 

On the segmental front, the company continued to remain cautious on its commercial business in Q1FY14. Even the two-wheeler segment witnessed some easing out on account of the slowdown in this segment. However, three-wheeler sales remained buoyant.

The company’s consumer finance business has been driving growth with the air conditioner segment doing good business. Even the SME business managed to carry on its momentum in the first quarter of FY14. The total asset under management now stands at Rs 19,229 crore as against Rs 17,517 crore in the March 2013 quarter.

On the operational front, the interest cost of the company continues to remain significantly low against the other NBFC peer group, helping the company sustain its margins. Apart from this, the asset quality has been very good despite strong growth. The gross and net NPAs stood at 1.14% and 0.25% respectively for the quarter under review. Although the net NPAs have increased from 0.19% in March 2013, Bajaj Finance is still better placed than its peers.

The consumer finance business of the company is still in the growth phase. We expect the company to put in better numbers for the rest of FY14 and hence recommend that investors stay invested in the scrip.