Bajaj Finserv Q3 net profit slips 3% but revenue rises; stock falls

Bajaj Finserv Ltd, the holding arm of Sanjiv Bajaj-led various financial services businesses including insurance and non-banking finance, reported a small decline in earnings for the third quarter ended December 31.

Consolidated net profit fell 3% to Rs 1,256 crore from Rs 1,290 crore in the year-ago period. On a sequential basis, net profit rose 12%.

Bajaj Finserv’s total revenue from operations rose 10% to Rs 17,587 crore from Rs 15,958 crore in the third quarter of last financial year.

The company’s profit was largely powered by contribution from the non-bank lending unit Bajaj Finance https://www.5paisa.com/news/bajaj-finance-q3-net-profit-surges-85-as-provisions-fall, which saw profit rise over 85% year-on-year. Profit contribution from the insurance businesses fell sharply from a year earlier.

The company’s share price has more than doubled over the past one year. The shares declined 4% on Thursday to trade around Rs 17,359 apiece after results were announced. The broader Mumbai market slumped 1.25%.

Bajaj Finserv Q3: Other Highlights

1) Bajaj Finance’s AUM grew 26% from a year earlier to Rs 181,250 crore.

2) Bajaj Finance’s Gross NPA and Net NPA for the quarter stood at 1.73% and 0.78%, respectively.

3) Bajaj Allianz General Insurance’s gross written premium fell to Rs 2,959 crore from Rs 3,392 crore a year earlier.

4) Bajaj Allianz General Insurance’s claim ratio increased to 69.6% from 66.6% due to losses from heavy rainfall in Uttarakhand and Tamil Nadu and higher losses on crop insurance.

5) Bajaj Allianz General Insurance profit after tax fell to Rs 304 crore from Rs 330 crore.

6) Bajaj Allianz Life Insurance shareholders’ profit after tax fell to Rs 88 crore from Rs 118 crore.

Management commentary

The company said economic conditions were better in the third quarter compared with the second quarter, although some key indicators like auto sales remain muted. The quarter also witnessed adverse weather events, which impacted its general insurance business.

Towards the end of the third quarter, the emergence of the Omicron variant has sparked renewed concerns on its spread and containment measures. Under these dynamic circumstances, the company’s businesses focused on growth.

Bajaj Finance, the lending arm, recorded its highest ever quarterly consolidated profit after tax with its nine-month earnings surpassing the annual profit for FY21. Also, new loans booked by BFL during Q3 rose 23% to 7.44 million from 6.04 million a year earlier.

Bajaj Finserv also said that a sharp surge in Covid-19 infections across India in recent days makes it difficult to predict how long this third wave will last and with what intensity; and when will it subside to manageable levels.

Risk of this is expected to remain elevated in the fourth quarter, the company said. It added that, with strong solvency, healthy liquidity, continued focus on risk and collections, digitised processes, improved cost structures and experience of last two years, it hopes to be in a better shape to face any adverse event.