BAJAJ FINANCE 2023-24 Annual Report Analysis

Fri, 28 Jun

BAJAJ FINANCE has announced its results for the year ended March 2024. Let us have a look at the detailed performance review of the company during the year 2023-24.

BAJAJ FINANCE Income Statement Analysis

• Interest income during the year rose 32.7% on a year-on-year (YoY) basis.
• Interest expenses were up by 48.7% YoY during the same period.
• Operating expenses increased by 26.8% YoY during the year.
• The company's net interest income (NII) increased by 25.7% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a decline and stood at 10.1% in FY24 as against 10.8% in FY23.
• Other income increased by 60.7% YoY during the year.
• Net profit for the year increased by 25.6% YoY.
• Net profit margins during the year declined to 26.3% in FY24 from 27.8% in FY23.

BAJAJ FINANCE Income Statement – 2023-24

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Interest Income	Rs m	414,102	549,695	32.7%
Other Income	Rs m	81	130	60.7%
Interest Expense	Rs m	127,006	188,860	48.7%
Net Interest Income	Rs m	287,096	360,835	25.7%
Operating Expense	Rs m	127,061	161,112	26.8%
Pre-provision Operating Profit	Rs m	160,116	199,853	24.8%
Provisions & Contingencies	Rs m	29	31	8.8%
Profit before tax	Rs m	155,279	193,096	24.4%
Tax	Rs m	40,202	48,584	20.9%
Profit after tax	Rs m	115,077	144,512	25.6%
Minority Interest	Rs m	0	0	0.0%
Net Interest Margin	%	10.8	10.1
Net profit margin	%	27.8	26.3

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BAJAJ FINANCE Balance Sheet Analysis

• The company's deposits during FY24 stood at Rs 601.5 bn as compared to Rs 446.7 bn in FY23, thereby witnessing an increase of 34.7%.
• Advances for the year stood at Rs 3,262.9 bn as compared to Rs 2,422.7 bn during FY23, a rise of 34.7%.
• Cost of deposits for BAJAJ FINANCE rose 13.3% and stood at 6.7%, while yield on advances rose to 0.0%.
• The lender's investments rose to Rs 313.2 bn during the year from Rs 230.6 bn in FY23.
• Borrowing stood at Rs 443.3 bn, a growth of 99.1% as compared to previous year.
• Overall, the total assets and liabilities for FY24 stood at Rs 3,747.2 bn as against Rs 2,742.9 bn during FY23, thereby witnessing a rise of 36.6%.

BAJAJ FINANCE Balance Sheet – as on March 2024

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Networth	Rs m	538,165	756,866	40.6%
Advances	Rs m	2,422,689	3,262,933	34.7%
Deposits	Rs m	446,656	601,509	34.7%
Yield on advances	%	0.0	0.0
Cost of Deposits	%	5.9	6.7
Investments	Rs m	230,624	313,203	35.8%
Borrowings	Rs m	222,689	443,327	99.1%
Total Assets	Rs m	2,742,892	3,747,242	36.6%

Current Valuations for BAJAJ FINANCE

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 233.8, an improvement from the EPS of Rs 190.4 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 7,169.2, stands at 29.6 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 5.9 times, while the price to income ratio stands at 7.8 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Income per share (Unadj.)	Rs	685.1	889.5
Earnings per share (Unadj.)	Rs	190.4	233.8
Diluted earnings per share	Rs	185.6	233.1
Avg P/E ratio	Rs	34.2	29.6
Avg P/ABV ratio	Rs	8.2	5.9
Avg Market Cap	Rs	3,932,543	4,271,285
Dividends per share (Unadj.)	Rs	30.00	36.00

Ratio Analysis for BAJAJ FINANCE

• Efficiency Ratios

  Credit/Deposit Ratio: The company's credit/deposit ratio improved and stood at 542.5x during FY24, from 542.4x during FY23. 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 1.38x during FY24, from 1.24x during FY23. 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 22.5% as on 31 March 2024 as compared to 25.0% 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 deteriorated and stood at 19.1% during FY24, from 21.4% during FY23. 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 deteriorated and stood at 3.86% during FY24, from 4.20% during FY23. 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 11.92% during FY24, from 11.76% during FY23. 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 0.9% as of 31 March 2024 compared to 1.2% 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 0.5% in financial year 2024. This compared with 0.4% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Credit/Deposit Ratio	x	542.4	542.5
Debt to Equity Ratio	x	1.2	1.4
Loans / Deposits	x	0.0	0.0
Capital Adequacy Ratio	%	25.0	22.5
Return on Equity	%	21.4	19.1
Return on Assets	%	4.2	3.9
Return on Capital Employed	%	11.8	11.9
% of Gross NPAs	%	1.2	0.9
% of Net NPAs	%	0.4	0.5
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 7,090.4 to Rs 7,169.2, registering a gain of Rs 78.9 or around 1.1%.

Overall, the S&P BSE SENSEX is up 25.8% over the year.

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