Thread by @tycoonmindset05

Bajaj Finance Concall was today at 4 pm

Here are the key highlights of the Conference call😀

Get ready for the Colorful Ride!

@AdityaD_Shah @dugalira @SanaSecurities @RaghuramanMenon @DillikiBiili @Bajaj_Finance

Q2 due to gradual opening of economy
- Continuously risk modeling

- Implementation of their business transformation

- AUM grew by 1%

-Wallet and cards will remain in pause for next 2 quarters. All other business to pre COVID levels.

- AUM growth of 6-7% is expected.
- Restart of all the company's businesses.

- The company is now witnessing month n month improvement.

- Volumes have been accelerated in all the businesses from September

- Urban consumption came in at 72%

- Company acquired 1.2 million customer.

- Company's carrying cost of liquidity is 220cr

- Now company will start to reduce the cost of liquidity and is expected to go back to pre covid levels by March 2021.

- Loan volumes number are looking better than covid

- management's plan at this point of time is to go back to February 2020 volumes by March- April 2021.

-- Opex de grew by 16%
- Some of the cost cutting is structural and will not come back. l and some of them are transient

- Out of 220 crores 120 crores is structural and will not come back

- Company will frontload the loan losses and absorb the shocks.

- By front-loading the loan losses then company will return back to February 2020 loan losses.

- Total provisioning a little more than 5k crores

- Loan Loss model in all the business is projecting an improvement in the businesses.

- RBI Resolution plan of ₹ 252 crore (₹ 214 crore in Mortgages & ₹ 38 crore in Consumer)

- Reversed capitalized interest to the tune of 361 crores.

- NPA numbers are not relevant at this point of time

- It will become relevant in Q3 and Q4 quarters to all the financial businesses

- Business transformation once done then it will lead to higher velocity at lower cost. It is expected to be done by June 2021

- B score credit model has also gone through changes.

-70% of the sale comes from existing customers.

-To grow Non linear way they had to change something fundamentally so they decided that in 3 clicks a person should be able to buy a financial product.

-Customer is still not able to reach the company.

- Company has 126 pocket insurance products.

-Company is competing with big players: mgt call was that this covid time is not the moment to grow.

-Flexi loan is not offered in B to B, only B to C

-Flexi loans: total o/s is 43k crores across all the segment.
8.6k crores in Q1

-Asset quality and provisioning cost:
The credit cost can be lowered by next quarter but the company has decided not to do it. The company is frontloading the costs.

-Liquidity buffer will be reduced by next quarter. There will be very little borrowing and all the borrowing will be through commercial papers

- One cannot model these numbers, Management will focus on risk management.
- As the world went into lockdown, all the 12 years modeled data were proven wrong in 2 weeks
- REMI and wallet loan has not started as management believes each business has its own cycle.

- 3 in 1 financial services, as the company has fully optimized the frame , the cost of doing business will go down and the rate of doing business with customer will go up

- Franchise is very large, distribution is very deep. The company will go back to pre covid levels

-Cost of Interest on Interest clarification is still awaited.
- Card partnership 75% of last years volumes. Currently there is partnership with RBL, but as they want to be dominant in this segment new partnership will be required but currently on pause mode there.

- 2 wheeler and 3 wheeler used to give higher loan losses. In this, 3 wheeler has performed much worse

- Lot of mortgage customer segment and 3 wheeler segment will go into restructuring.

- If local trains in Bombay run then 3 wheelers will work

- Emergency and acceleration the covid has created. The mgt has rallied extremely well. Clutch is transformation.
The mgt is driving well

- Online Cross sell differs by product and risk.

- The decline may increase as bureau data is made available then there will be more clarity by November end.

-They will have to check has the person paid the company and has the person paid the system or not.
-Personal loan 11.2 million across rural and urban franchise today this number is 10 million and 5 million to credit card

- Deep relationship with franchise like Amazon and flipkart.

- If franchise grow then ecommerce would grow thus financing would grow

- Portfolio bounce has not gone back to pre-covid levels
fresh customers who default at much lower rate and they get involved in system.

- There are 3 types of loan Term loan, drop line and Flexi.

- Tail risk in more in areas which has gone back to normalcy.

- Company will use clutch, break and accelerator at the same time to ensure there is no blind spots.

- Underwriting standards: If covid would not have happened, in consumer durable sector the bounce rate would have been 4%. But right now it is 2.5%

- OEM, payment solution providers have been there in covid and would be there in post covid times. The company would not like to dilute its share which is around 70%

- Share of Fees as a product for customer would grow. It would be pull model not push model. 3 in 1financial service will pay a major role

Refer our recent FY 2020 Concalls here.👇👇

thetycoonmindset.com/finance/confer…