Bajaj Fin’s Q1 moratorium book declines

Shares of Bajaj Finance gained nearly 4% to Rs 3,230 in the intra-day deals on the BSE as the non-bank finance company’s (NBFC’s) business operations during April-June revealed slight improvement, which is likely to translate into a better earnings via lower credit cost / margin compression.
The biggest surprise was reflected in the moratorium book. The company’s assets under management (AUM) under moratorium declined from 27%, at the end of April 2020, to about 15.5% at the end of June 2020.
On an absolute basis, the moratorium book declined 40–45% to Rs 21,000 crore. The development is a welcome surprise, owing to which it may face little stress addition.

Bajaj Finance witnessed an improvement in customer franchise to 43 milllion at the end of June quarter of FY21 as compared to 36.9 million as of 30 June, 2019. 
AUMs stood at approximately Rs 138,000 crore at the end of Q1FY21 as compared to Rs 128,898 crore in the year-ago quarter. That apart, deposit book stood at approximately Rs 20,000 crore as of 30 June, 2020 compared to Rs 15,084 crore as of 30 June, 2019.

New loans, however, grew at a slower pace due to Covid-19 led lockdown and business disruption. New loans booked during Q1FY21 were 1.7 million as compared to 7.3 million in Q1FY20.
Interestingly, retail deposit base is almost doubling every year and now constitutes over 60% of the overall deposits. 70-75% of deposits are of more than 1-year tenure and granularity is reflected in top-20 retail depositors constituting 7.3% of retail deposits.
The Company may consider additional acce lerated provisioning for Covid-19 in Q1FY21 as well to further strengthen its balance sheet.

It continues to remain well capitalized with capital adequacy ratio (CRAR) of approximately 26.4 per cent as of June 30. Its consolidated liquidity surplus was around Rs 17,600 crore as of June 30.
A pickup in economic activities should lead to better AUM growth going forward.

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