NBFC COMPANY TO BUY WHEN BEAR MARKET STARTS ?

When ever Stock Markets Correction Starts We need to buy Large Cap Stocks Instead of Small Caps & Mid caps Because When Ever Markets Recovers These are the Stocks which will Gain Early .

Bajaj Finance Ltd., incorporated in the year 1987, is a Large Cap company (having a market cap of Rs 277,672.25 Crore) operating in NBFC sector. Bajaj Finance Ltd.

key Products/Revenue Segments include Interest, Fees & Commission Income, Income From Sale Of Share & Securities, Income From Financial Services and Service Charges for the year ending 31-Mar-2020.

For the quarter ended 31-12-2020, the company has reported a Consolidated Total Income of Rs 6,658.47 Crore, up 2.07 % from last quarter Total Income of Rs 6,523.29 Crore and down 5.23 % from last year same quarter.

Total Income of Rs 7,025.93 Crore. Company has reported net profit after tax of Rs 1,145.98 Crore in latest quarter.

The company’s top management includes Mr.Rahul Bajaj, Dr.Naushad Forbes, Ms.Gita Piramal, Mr.Ranjan Sanghi, Mr.Dipak Poddar, Dr.Omkar Goswami, Mr.D J Balaji Rao, Mr.Rajiv Bajaj, Mr.Madhur Bajaj, Mr.Rajeev Jain, Mr.Sanjiv Bajaj, Mr.Anami Roy. Company has S R B C & Co. LLP as its auditors.

Bajaj Finance is mainly engaged in the business of lending. BFL has a diversified lending portfolio across retail, SME and commercial customers with a significant presence in urban and rural India.

It also accepts public and corporate deposits and offers variety of financial services products to its customers.

Largest NBFC in India
Bajaj Finance (BFL) started its journey in the year 1987 as a vehicle financing company and now is one of the largest NBFC in India.

It has more than 1,47,100 Cr of Assets under Management (AUM) . BFL has a diversified lending portfolio and has its presence in various lending segments.

Consumer Lending (36% of AUM) 
BFL finances more than 13.5 Million customers and is one of the leading lenders of consumer electronics, furniture and digital products.

The company provides its own Unique Customer Identification Number (EMI) to its customers after their first purchase and the company has issued 22 Million Cards through which it has financed 13.6 Million Purchases.

Financing customers through EMI cards for their purchase on online portals have been one of the important business of the company in last few years and it showed a 22% growth in the previous year. 

Mortgages (33% of AUM)
The segment offers Home loans, loans against properties, developer finance and lease rental discounting and many more.

The company has the right for the possession of the vehicles or the properties in case of default by the customer and the company sells those assets on auction basis. 

SME Lending (13% of AUM) 
Under this segment, the company offers secured and unsecured loans to small businesses.

The business is present in over 1,100 locations in India and they provide working capital loans and term facilities and the business grew by 15% Year On Year basis.

Rural Lending (9% of AUM)
BFL started this initiative in the year 2013 and now is operational in 1,357 locations through nearly 19,600 points of presence in its rural lending division present across 21 states and the segment has witnessed a higher growth.

The segment had an AUM of 13,328 crore an increase of 44% YoY compared to the previous year.^#

Commercial Lending (9% of AUM)
Under this segment the company provides loan against securities, loans to financial institution group (FIG), working and growth capital loans to various Industries and Midsized companies and the company also fully exited from the warehouse receipt financing business.

Housing and Depositary Business
BFL also has its presence in the Housing Finance segment through its 100% subsidiary Bajaj Housing Finance which has a AUM of 35,492 crores & the company operates in the Depositary business through Bajaj Finance securities Ltd and it acts as a stock broker and depository participant.

Largest Financier for Bajaj Auto 
The company financed a purchase of over 1.1 million motorcycles and about 187,000 three-wheelers in FY20 for Bajaj Auto Ltd.

This constituted over 54% of domestic sales of Bajaj motorcycles and 51% of domestic sales of Bajaj three-wheelers. The support from Bajaj Auto has enabled the company to get significant customers on day to day basis.

Pan India Presence
BFL has a total of 2814 branches spread across India out of which 1604 branches are based on Rural Areas and the rest from the Urban areas.

The company has a overall distribution network of 1,02,800 active networks spread across India

Least Cost of Funds 
Bajaj Finance has one of the lowest cost of borrowing in the Industry at 8% on Average and the Borrowing mix of the company is Money Markets 42%, Banks 35%, Deposits 19%, ECB 4%. Cheaper Funds has enabled the company to attract the best of the Borrowers.

Deposits
The company accepts deposits from both the retail and the corporate clients and the deposits contributed 21% of the borrowings of the company.

There has been a huge increase (92% YOY) in the deposits made by the retail segment.

Lowest NPA among the NBFC’s
Bajaj Finance has one of the lowest NPA’s among the NBFC Industry and the company reported a Net NPA of 0.65% for FY20 .

The company has made healthy provisioning of 58% for the stage – 3 Assets and 18% for the Stage 2 Assets through which they have absorbed the Covid stimulated Non repayments .

The low NPA’s can be attributed majorly towards data analytics through Machine Learning (ML).

The company has deployed various ML models which has yielded positive outcomes for the company by predicting the credibility of the borrower.

BFL has also invested in an internal learning facility called the School of Analytics to understand and enhance the usage of ML.

Vulnerable to economic cycles
56% of the loan book of the company constituted of personal loans, consumer durable loans, 2 and 3wheeler finance and other unsecured business loans which are highly risky asset segment and they are vulnerable to the changes in the economic cycles.

Increase in Cash from Investing

Company has used Rs 8756.88 cr for investing activities which is an YoY increase of 62.8%.

Employee & Interest Expense

Company has spent 35.92% of its operating revenues towards interest expenses and 9.67% towards employee cost in the year ending.

Lower credit growth

In line with slowdown in economic growth in FY2020, bank credit recorded a dismal 6.1% year-on-year growth as of

27 March 2020 — largely driven by growth in personal loans. Credit growth to industry and services has been decelerating sharply

• Stock Returns vs Nifty 50 Stock gave a 3 year return of 135.64% as compared to Nifty 100 which gave a return of 38.16%.
• Stock Returns vs Nifty Financial Services Stock generated 135.64% return as compared to Nifty Financial Services which gave investors 46.01% return over 3 year time period.
• Stock generated 135.64% return as compared to Nifty Financial Services which gave investors 46.01% return over 3 year time period.

Ratios

Consolidated Figures in Rs. Crores / View Standalone

	Mar 2015	Mar 2016	Mar 2017	Mar 2018	Mar 2019	Mar 2020
ROE %		21%	22%	20%	22%	20%

STOCK NAME : BAJAJ FINANCE .

Cmp : 4380 , Target : 4800 – 5200 – 5600++

Time Frame : 1 MONTH TO 6 Months .

STUDY PURPOSE ONLY .

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