BAJAJ FINANCE 2022-23 Annual Report Analysis

Fri, 7 Jul

BAJAJ FINANCE has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the company during the year 2022-23.

BAJAJ FINANCE Income Statement Analysis

• Interest income during the year rose 30.8% on a year-on-year (YoY) basis.
• Interest expenses were up by 28.9% YoY during the same period.
• Operating expenses increased by 6.6% YoY during the year.
• The company's net interest income (NII) increased by 31.7% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a growth and stood at 10.8% in FY23 as against 10.7% in FY22.
• Other income increased by 9.3% YoY during the year.
• Net profit for the year increased by 63.7% YoY.
• Net profit margins during the year increased to 27.8% in FY23 from 22.2% in FY22.

BAJAJ FINANCE Income Statement – 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Interest Income	Rs m	316,405	413,974	30.8%
Other Income	Rs m	76	83	9.3%
Interest Expense	Rs m	98,546	127,013	28.9%
Net Interest Income	Rs m	217,858	286,961	31.7%
Operating Expense	Rs m	119,051	126,929	6.6%
Pre-provision Operating Profit	Rs m	98,884	160,116	61.9%
Provisions & Contingencies	Rs m	24	29	18.9%
Profit before tax	Rs m	95,038	155,279	63.4%
Tax	Rs m	24,756	40,202	62.4%
Profit after tax	Rs m	70,282	115,077	63.7%
Minority Interest	Rs m	0	0	0.0%
Net Interest Margin	%	10.7	10.8
Net profit margin	%	22.2	27.8

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BAJAJ FINANCE Balance Sheet Analysis

• The company's deposits during FY23 stood at Rs 446.7 bn as compared to Rs 308.0 bn in FY22, thereby witnessing an increase of 45.0%.
• Advances for the year stood at Rs 2,422.7 bn as compared to Rs 1,914.2 bn during FY22, a rise of 26.6%.
• Cost of deposits for BAJAJ FINANCE fell 10.5% and stood at 5.9%, while yield on advances rose to 0.0%.
• The lender's investments rose to Rs 230.6 bn during the year from Rs 125.9 bn in FY22.
• Borrowing stood at Rs 222.7 bn, a growth of 57.2% as compared to previous year.
• Overall, the total assets and liabilities for FY23 stood at Rs 2,742.9 bn as against Rs 2,115.5 bn during FY22, thereby witnessing a rise of 29.7%.

BAJAJ FINANCE Balance Sheet – as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	433,151	538,165	24.2%
Advances	Rs m	1,914,233	2,422,689	26.6%
Deposits	Rs m	307,991	446,656	45.0%
Yield on advances	%	0.0	0.0
Cost of Deposits	%	6.6	5.9
Investments	Rs m	125,910	230,624	83.2%
Borrowings	Rs m	141,625	222,689	57.2%
Total Assets	Rs m	2,115,548	2,742,916	29.7%

Current Valuations for BAJAJ FINANCE

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 190.4, an improvement from the EPS of Rs 116.5 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 7,771.5, stands at 34.2 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 8.7 times, while the price to income ratio stands at 9.5 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Income per share (Unadj.)	Rs	524.5	684.9
Earnings per share (Unadj.)	Rs	116.5	190.4
Diluted earnings per share	Rs	116.0	189.9
Avg P/E ratio	Rs	53.2	34.2
Avg P/ABV ratio	Rs	8.2	8.7
Avg Market Cap	Rs	3,741,873	3,932,543
Dividends per share (Unadj.)	Rs	20.00	30.00

Ratio Analysis for BAJAJ FINANCE

• Efficiency Ratios

  Credit/Deposit Ratio: The company's credit/deposit ratio deteriorated and stood at 542.4x during FY23, from 621.5x during FY22. 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 1.24x during FY23, from 1.04x during FY22. 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 25.0% as on 31 March 2023 as compared to 27.2% 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 21.4% during FY23, from 16.2% during FY22. 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 4.20% during FY23, from 3.32% during FY22. 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 11.76% during FY23, from 10.26% during FY22. 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 1.2% as of 31 March 2023 compared to 1.6% 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 0.4% in financial year 2023. This compared with 0.9% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Credit/Deposit Ratio	x	621.5	542.4
Debt to Equity Ratio	x	1.0	1.2
Loans / Deposits	x	0.0	0.0
Capital Adequacy Ratio	%	27.2	25.0
Return on Equity	%	16.2	21.4
Return on Assets	%	3.3	4.2
Return on Capital Employed	%	10.3	11.8
% of Gross NPAs	%	1.6	1.2
% of Net NPAs	%	0.9	0.4
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 up from Rs 5,859.9 to Rs 7,771.5, registering a gain of Rs 1,911.6 or around 32.6%.

Overall, the S&P BSE SENSEX is up 23.8% over the year.

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