BAJAJ FINANCE 2021-22 Annual Report Analysis

Thu, 31 Mar

BAJAJ FINANCE has announced its results for the year ended March 2022. Let us have a look at the detailed performance review of the company during the year 2021-22.

BAJAJ FINANCE Income Statement Analysis

• Interest income during the year rose 18.6% on a year-on-year (YoY) basis.
• Interest expenses were up by 3.4% YoY during the same period.
• Operating expenses increased by 9.8% YoY during the year.
• The company's net interest income (NII) increased by 27.0% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a growth and stood at 10.7% in FY22 as against 10.4% in FY21.
• Other income declined by 46.6% YoY during the year.
• Net profit for the year increased by 59.0% YoY.
• Net profit margins during the year increased to 22.2% in FY22 from 16.6% in FY21.

BAJAJ FINANCE Income Statement – 2021-22

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Interest Income	Rs m	266,896	316,590	18.6%
Other Income	Rs m	150	80	-46.6%
Interest Expense	Rs m	95,194	98,477	3.4%
Net Interest Income	Rs m	171,702	218,113	27.0%
Operating Expense	Rs m	108,676	119,309	9.8%
Pre-provision Operating Profit	Rs m	63,175	98,884	56.5%
Provisions & Contingencies	Rs m	19	24	24.0%
Profit before tax	Rs m	59,923	95,038	58.6%
Tax	Rs m	15,724	24,756	57.4%
Profit after tax	Rs m	44,198	70,282	59.0%
Minority Interest	Rs m	0	0	0.0%
Net Interest Margin	%	10.4	10.7
Net profit margin	%	16.6	22.2

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BAJAJ FINANCE Balance Sheet Analysis

• The company's deposits during FY22 stood at Rs 308.0 bn as compared to Rs 258.0 bn in FY21, thereby witnessing an increase of 19.4%.
• Advances for the year stood at Rs 1,914.2 bn as compared to Rs 1,466.9 bn during FY21, a rise of 30.5%.
• Cost of deposits for BAJAJ FINANCE fell 18.6% and stood at 1.1%, while yield on advances rose to 0.0%.
• The lender's investments fell to Rs 125.9 bn during the year from Rs 186.7 bn in FY21.
• Borrowing stood at Rs 141.6 bn, a growth of 48.7% as compared to previous year.
• Overall, the total assets and liabilities for FY22 stood at Rs 2,115.5 bn as against Rs 1,705.2 bn during FY21, thereby witnessing a rise of 24.1%.

BAJAJ FINANCE Balance Sheet – as on March 2022

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Networth	Rs m	366,152	433,151	18.3%
Advances	Rs m	1,466,869	1,914,233	30.5%
Deposits	Rs m	258,034	307,995	19.4%
Yield on advances	%	0.0	0.0
Cost of Deposits	%	1.3	1.1
Investments	Rs m	186,727	125,910	-32.6%
Borrowings	Rs m	95,231	141,625	48.7%
Total Assets	Rs m	1,705,245	2,115,543	24.1%

Current Valuations for BAJAJ FINANCE

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 116.5, an improvement from the EPS of Rs 73.5 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 6,102.4, stands at 53.2 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 8.5 times, while the price to income ratio stands at 11.8 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Income per share (Unadj.)	Rs	443.7	524.8
Earnings per share (Unadj.)	Rs	73.5	116.5
Diluted earnings per share	Rs	73.0	116.1
Avg P/E ratio	Rs	52.4	53.2
Avg P/ABV ratio	Rs	10.8	8.5
Avg Market Cap	Rs	2,317,486	3,741,873
Dividends per share (Unadj.)	Rs	10.00	20.00

Ratio Analysis for BAJAJ FINANCE

• Efficiency Ratios

  Credit/Deposit Ratio: The company's credit/deposit ratio improved and stood at 621.5x during FY22, from 568.5x during FY21. The credit/deposit ratio tells us how much money a company has raised in the form of deposits and has deployed as loans.

  Debt to Equity Ratio: The company's debt to equity ratio increased and stood at 1.04x during FY22, from 0.96x during FY21. The debt to equity ratio of a company tells us how much debt a company uses relative to its equity.

• Liquidity Ratios

  Capital Adequacy Ratio (CAR): BAJAJ FINANCE's capital adequacy ratio (CAR) was at 27.2% as on 31 March 2022 as compared to 28.3% a year ago. This ratio helps measure the financial strength of the company or any finance company to meet their obligations using their assets and capital.

  A company that has a good CAR has enough capital to absorb potential losses. Thus, it has less risk of becoming insolvent and losing depositor's money.

  Provision Coverage Ratio (PCR): Apart from CAR, you also need to take a look at the company's PCR and LCR ratios. Provisioning coverage ratio (PCR) is the percentage of funds that a company sets aside for covering losses due to bad debts.

  So a high PCR ratio means asset quality issues are under control and the company is not vulnerable.

  Liquidity Coverage Ratio (LCR): The LCR is designed to ensure that companies hold a sufficient reserve of high-quality liquid assets to allow them to survive a period of significant liquidity stress lasting 30 calendar days.

• Profitability Ratios

  Return on Equity (ROE): The return on equity (ROE) ratio for the company improved and stood at 16.2% during FY22, from 12.1% during FY21. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

  Return on Assets (ROA): The return on asset (ROA) ratio of the company improved and stood at 3.32% during FY22, from 2.59% during FY21. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the company improved and stood at 10.25% during FY22, from 9.38% during FY21. The ROCE measures the ability of a company to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

• NPA Ratios

  Gross NPA Ratio: The gross NPA ratio is the ratio of a company's gross NPAs to gross advances. BAJAJ FINANCE's gross NPA ratio stood at 1.6% as of 31 March 2022 compared to 1.8% in the same period a year ago.

  A high gross NPA ratio is a bad thing as it indicates how much of a company's loans are in danger of not being repaid.

  Net NPA Ratio: In simple language, net NPAs are simply the total non-performing assets minus the provision left aside. It gives you the exact value of NPAs after the company has made provisions.

  The net NPA ratio of BAJAJ FINANCE was 0.9% in financial year 2022. This compared with 0.9% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Credit/Deposit Ratio	x	568.5	621.5
Debt to Equity Ratio	x	1.0	1.0
Loans / Deposits	x	0.0	0.0
Capital Adequacy Ratio	%	28.3	27.2
Return on Equity	%	12.1	16.2
Return on Assets	%	2.6	3.3
Return on Capital Employed	%	9.4	10.3
% of Gross NPAs	%	1.8	1.6
% of Net NPAs	%	0.9	0.9
Yield on Advances	x	0.0	0.0
Yield on Investments	x	0.0	0.0

To see how BAJAJ FINANCE has performed over the last 5 years, please visit here.

BAJAJ FINANCE Share Price Performance

Over the last one year, BAJAJ FINANCE share price has moved down from Rs 6,539.3 to Rs 6,102.4, registering a loss of Rs 436.9 or around 6.7%.

Overall, the S&P BSE SENSEX is up 7.8% over the year.

(To know more, you can check out historical annual results for BAJAJ FINANCE here and quarterly results for BAJAJ FINANCE here)

Read: Latest Annual Report Analysis of BAJAJ FINANCE