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Bajaj Finance: SME vertical drives growth - Views on News from Equitymaster

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Bajaj Finance: SME vertical drives growth
Jan 15, 2014

Bajaj Finance Ltd declared its results for the third quarter of the financial year 2013-14 (3QFY14) results. The institution has reported a 29.8% YoY growth in total income while net profits have grown by 21.3% YoY during the quarter. Here is our analysis of the results.

Performance summary
  • Income from operations grows 29.8% YoY in 3QFY14 on the back of 45% YoY growth in deployments.
  • Other income increases by whopping 116% YoY in 3QFY14 and almost 180% YoY during 9mFY14.
  • Net profit grows by 21.3% YoY for 3QFY14 owing to steady income stream and healthy other income performance during the quarter. For 9mFY14, profits grew by 25.6% YoY on strong income growth.
  • Gross NPAs and Net NPAs stand at 1.15% and 0.23% respectively and the provision coverage ratio stands at 80% as at the end of 9mFY14.
  • Capital adequacy ratio (inclusive of tier II capital) is recorded at 19.53% during 3QFY14 and the company stands well-capitalized to boost its growth trajectory.

Standalone Financial Results
(Rs m) 3QFY13 3QFY14 Change 9mFY13 9mFY14 Change
Income from Operations 8,247 10,703 29.8% 22,615 29,603 30.9%
Expenses 5,916 7,871 33.0% 16,347 21,639 32.4%
Profit from operations 2,331 2,833 21.5% 6,268 7,964 27.1%
Other Income 36 116 226.2% 64 180 179.8%
Profit before tax 2,366 2,949 24.6% 6,332 8,144 28.6%
Tax 765 1,007 31.6% 2,057 2,775 34.9%
Effective tax rate 32.3% 34.2%   32.5% 34.1%  
Profit after tax/ (loss) 1,601 1,941 21.3% 4,275 5,369 25.6%
Net profit margin (%) 19.4% 18.1%   18.9% 18.1%  
No. of shares (m)         49.8  
Book value per share (Rs)*         676.4  
P/BV (x)         2.3  
* (Standalone book value as on 31st March 2013)
What to expect?
At the current price of Rs 1547, the stock is trading at 2.3 times our estimated FY16 adjusted book value. We will furnish the detailed analysis of the earnings performance after incorporating key takeaways from the conference call with the management by 16th January 2014.

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