Bajaj Finance Limited announced its Quarterly Update for the quarter ended 31st December 2021 on 4th January 2022. The Company has given strong numbers showing growth coming in track. The company will be announcing its Q3FY22 Highlights on Thursday 18th January 2022. So, let’s move ahead and discuss the Q3FY22 update in detail in this article.
Bajaj Finance- Q3FY22 Update 5-Point Detailed Analysis
According to the Q3 FY22 quarter updates, Consumer Finance Lender Bajaj Finance has added 26 Lakh new customers and 74 Lakh new loans during the Oct-Dec quarter. Assets under Management (AUM) reported a new high at Rs.1.81 Lakh Cr as of Dec-21 up 26.6% YoY & 8.3% QoQ, thus reporting a stellar growth in the AUM during Q3 FY22.
Here is a 5 Point Analysis of Bajaj Finance on Q3 FY22 Financial Highlights:
Bajaj Finance Stock has performed strongly in the recent past by delivering 10% in the last 1 week, while has rebounded significantly by 15% from December 2021 lows of around Rs. 6,579. As of Wednesday 5th January 2022, the stock is trading at Rs. 7,671
1) Customer Franchise:
- Total Customer Franchise is growing with New Customers acquisition.
- New Customer Addition gained Momentum in Dec-21 with rising economic activities after the 2nd wave of COVID.
- New Customers Acquired number (2.60 MM/26 Lakhs) crossed the Pre-COVID level (Dec-19: 2.46 MM) driven by
- Granular Business Recovery
- Implementation of Business Transformation Plan for attaining Pre-COVID Growth & Financial performance
- Customers Franchise Addition in Dec-21 quarter (2.60 MM/ 26 Lakhs) i.e. 10.4 MM or 1.04 Cr. annually has also surpassed the company’s general guidance of 7-8 MM or 0.7-0.8 Cr. annually.
- The Total customers of Bajaj Finance as of 31st December 2021 stood at 55.40 Million or 5.54 Cr. Customers.
- Also, the new loans booked in December 2021 quarter is 7.4 Million or 74 Lakhs which is near to the level of 7.7 Million or 77 Lakhs loans booked in the December 2019 Quarter.
2) Asset Under Management Growth gaining the pace:
- Bajaj Finance is having Assets Under Management (AUM) of Rs. 1.81 Lakh Cr. as of the quarter ended 31st December 2021 which has increased by 26.3% and 8.6% YoY and QoQ respectively.
- The AUM was Rs. 1.07 Lakh Cr. in Q3FY19 (Pre-Covid Level), which grew to Rs. 1.47 Lakh Cr. in Q4FY20, and is finally at Rs. 1.81 Lakh Cr. in Q3FY22 showing that growth in AUM is gaining pace.
3) Consolidated Liquidity Surplus:
- The Consolidated Liquidity Buffer of Baja Finance is Rs. 14,300 Cr. as of December 2021.
- The lower liquidity buffer shows that the company is aggressive on new customer acquisitions or new loans disbursement, while the higher liquidity buffer represents the opposite situation.
- The company’s liquidity position remains very strong
- Though the Liquidity Buffer reported a steep decline from Oct-20, driven by:
- Stable market conditions
- Improving Economic Outlook from H2:FY21
- Liquidity buffer as a % of Total Borrowings is also settling down to 10-12% level from 20% level last year.
4) Capital Adequacy Ratio:
- The company continues to remain very well capitalized with a Capital Adequacy Ratio of 27% as of December 31, 2021.
- The company has adequate capital to meet its next 3 years growth aspiration
5) Deposit Book:
- Share of Deposits % in Liability Mix is consistently increasing which indicates company’s Focus on Building Strong Liability Franchise through Deposits
- Currently, Deposits contribute around 20% of the overall liability mix
- As on Dec-21, Deposit Book stood at Rs.30,000 Cr, up 26% YoY & 4.2% QoQ.
What should Shareholders Do?
The above-discussed figures and performances of the company are the valid reasons for the strong performance of the stock in the recent past. From a long-term viewpoint, the growth of the company remains intact. Further, the company aspires to have the Asset Under Management (AUM) level in line with the AUM of the leading private sector banks. Hence, it will be an interesting thing to watch that how the company will grow in the future and will it be able to achieve its goals and aspirations.