Result Update

July 28, 2016

Rating matrix
Rating
Target
Target Period
Potential Upside

Bajaj Finserv (BAFINS)

Buy
| 2900
12 months
11%

Finance momentum strong; life picks up.

Whats Changed?
Changed from | 2450 to | 2900
Changed from | 138.6 to | 149.4
Changed from | 188.8 to | 197.6
Unchanged

Target
EPS FY17E
EPS FY18E
Rating

Quarterly Performance
| Crore
Income from oper.
Total expenditure
PBT
Tax + Minority
PAT

Q1FY17 Q1FY16 YoY (%) Q4FY16 QoQ(%)

2444
1904
28.3
2224
9.9
1490
1156
28.8
1326
12.3
954
748
27.6
898
6.3
517
401
29.0
457
13.2
437
347
25.9
441
-0.9

Key Financials
| Crore
Revenue
PBT
Net Profit
EPS (|)

FY15
18,051.1
3,246.2
1,689.8
106.2

FY16E
20,696.0
3,836.1
1,869.4
117.5

FY17E
23,513.2
4,641.7
2,377.3
149.4

FY18E
27,201.2
5,837.1
3,144.8
197.6

FY17E
17.5
19.4
2.7
3.0
17.0
2.1

FY18E
13.3
14.7
2.3
2.5
18.8
2.5

Valuation summary
P/E
Target P/E
P/ABV
Target P/ABV
RoE
RoA

FY15E
24.7
27.3
3.8
4.2
16.7
2.0

FY16E
22.3
24.7
3.3
3.6
15.7
1.9

Stock data
Particular
Market Capitalization
Net worth
52 week H/L (|)
Equity capital
Face value
DII Holding (%)
FII Holding (%)

Amount
| 41676 crore
|12752 crore
2781/1575
| 80 Crore
|5
7.9
7.8

Price performance (%)

Bajaj Finserv Ltd
HDFC Ltd
Reliance Capital Ltd

1M
27.2
8.7
0.9

3M
35.7
17.1
5.9

6M
37.9
17.4
10.7

| 2625

12M
50.0
1.5
3.4

Research Analyst
Kajal Gandhi
kajal.gandhi@icicisecurities.com
Vishal Narnolia
vishal.narnolia@icicisecurities.com
Vasant Lohiya
vasant.lohiya@icicisecurities.com

ICICI Securities Ltd | Retail Equity Research

Consolidated PAT increased 15.1% YoY to | 538 crore, below our

estimate of | 562.8 crore, led by muted general insurance PBT and
higher-than-expected tax outgo during the quarter
Led by strong growth in advances, the commercial finance business
continued to see traction with 39.1% YoY growth in topline at | 2304
crore, providing a boost to the consolidated performance. PBT also
increased 56.9% YoY at | 673.7 crore
General insurance premium growth remained healthy at 15.5% YoY to
| 1527 crore. This was led by higher claims at 72.4%, which led to
underwriting losses during the quarter
The life insurance business growth declined 7.2% YoY to | 1004
crore, lower than our estimate, as group new business premium
remained subdued
Strong brand name enhances sustainability, reliability
Bajaj Finserv, a financial conglomerate under the flagship brand of Bajaj
and leadership of Sanjeev Bajaj, witnessed a sharp surge in earnings in all
three key business segments. In general insurance, it is the most profitable
and efficient player among competitors. Bajaj Finance, a niche consumer
durable lender, reported a 4x increase in loan book in FY11-15 while
earnings surged at 38% CAGR. BALIC enjoys a market share of ~6.8%.
Post revision, we expect consolidated revenue, PAT to grow at a CAGR of
14.6%, 29.7% to | 27201 crore, | 3145 crore, respectively, in FY16-18E.
Niche in general insurance; superior return ratios compared to peers
It is a strong business model generating RoE in excess of 24%, reporting
underwriting profit on <100% combined ratio & extensive retail focus
enable market share of ~6.7% in gross written premium (GWP). Prudent
underwriting with ~77% of net earned premium (NEP at | 4572 crore in
FY16) in retail segment (motor, health insurance) stays a key rationale for
sustained profit, net worth growth. We expect NEP, PAT to continue
steady growth at 14%, 13.9% CAGR to | 5600 crore, | 694 crore,
respectively.
Higher share in consolidated P/L led by strong profitability in finance
A distinguished business model in the consumer durables portfolio
boosted loan book, growing 36% YoY to | 44229 crore in FY16 while asset
quality sustained despite a weak economic environment. Margins
sustained ~10% due to higher IRR in products. PAT surged at 39% CAGR
to | 897 crore in FY11-16 with contribution bulging to 42% from 25%
earlier. Expect healthy PAT growth of 35% CAGR in FY17-18E to | 2344
crore.
Life insurance business to improve gradually
Bajaj Allianz Life Insurance posted its first profit since FY10 of | 542 crore &
is now earning higher PAT of | 879 crore (FY16). Post regulatory overhang
on Ulip, etc, fading now, business is expected to pick up gradually. FY18E
NBP, PAT may grow 18%, 13.7% CAGR to | 3401 crore, | 969 crore.
Finance segment remains strong; insurance business to pick up
Based on SOTP valuation, we revise our target price at | 2900 per share for
Bajaj Finserv, which implies a multiple of 14.7x on FY18E consolidated
earnings. The stock is available at P/E valuation of 13.3x FY18E earnings
even post conservative forward estimates on life and general insurance.
Dividend from the insurance business can be an upside risk. We maintain
BUY rating on the stock.

Variance analysis
Q1FY17
1527.1

Q1FY17E
1,506.9

Q1FY16
1,321.9

YoY (%)
15.5

Q4FY16
1,730.2

QoQ (%)
-11.7

1004.1
1004.1
805.3
357.1
48.0
2931.5

1,125
1,124.9
782
316
90
3,008.4

1,081.7
1,081.7
709
288
52
2,772.7

-7.2
-7.2
13.5
23.9
-7.7
5.7

2,419
2,418.6
808
480
141
4,336.3

-58.5
-58.5
-0.3
-25.6
-65.9
-32.4

Retail financing
2303.8
Windmill
23.5
Investment and others
40.1
Total
5265.1
Interest and Finance Charges
852.5
Other Exp
3269.4
Total Expenses
4121.9
PBT
1143.2
PAT
537.5
Source: Company, ICICIdirect.com Research

2,301
15.6
62
5,371
664.6
3,526.6
4,191.2
1,180.1
618.8

1,656
14.2
59
4,487
664.6
2,897.1
3,561.7
925.2
466.9

39.1
66.1
-32.2
17.3
28.3
12.9
15.7
23.6
15.1

1,958
10.7
105
6,337
789.5
4,520.3
5,309.8
1,026.9
517.9

17.7
120.1
-61.8
-16.9
8.0
-27.7
-22.4
11.3
3.8

General Insurance
Life Insurance
Net premium earned
Investment and other income
Reinsurance Ceded
Reserve for unexpired risk
Total Insurance

Comments
General insurance premium remained on steady growth path
De-growth in group new business impacted premium growth; as
expected during the quarter

Topline traction continued due to healthy growth in AUM at 40% YoY

Finance segment supported muted insurance business PBT

Healthy PAT growth led by finance segment

Change in estimates
(| Crore)
Total Income
PBT
PAT
ABV (|)

Old
23,231.0

FY17E
New
23,513.2

% Change
1.2

Old
26,603.0

FY18E
New
27,201.2

% Change
2.2

4,281.0
2,206.0
805.3

4,641.7
2,377.3
805.3

8.4
7.8
0.0

5,037.0
3,003.0
952.2

5,837.1
3,144.8
953.0

15.9
4.7
0.1

PBT revised upwards led by higher leverage in finance

segment

Source: Company, ICICIdirect.com Research

Assumptions
FY15
Commercial Finance growth (%)
35.8
Life Ins Premium growth (%)
3.0
General Ins GWP growth (%)
15.6
Source: Company, ICICIdirect.com Research

Current
FY16E
FY17E
37.0
32.0
-2.0
3.0
11.3
13.0

ICICI Securities Ltd | Retail Equity Research

FY18E
31.7
6.2
13.5

Earlier
FY17E
29.5
3.1
13.5

FY18E
30.0
6.3
14.0

Page 2

Company Analysis
Business interests
Bajaj Finserv is a financial conglomerate engaged in life insurance, general
insurance, consumer finance and other financial products. Apart from
financial services, the company has an operational wind energy asset. The
portfolio of the company includes 74% in the two insurance companies
viz. Bajaj Allianz Life Insurance Company (BALIC) and Bajaj Allianz General
Insurance Company (BAGIC), 50% holding in Bajaj Allianz Financial
Distributors, 57.6% in Bajaj Finance and 100% holding in Bajaj Financial
Solutions.
Consolidated revenues grew at ~6.6% CAGR in FY10-16 from | 13997
crore to | 20696 crore. Within the same, the contribution of insurance was
49% while that of Bajaj Finance was 35% in FY16. Improving profitability
from the life insurance segment compared to loss in FY08 of | 213 crore to
PBT of | 1349 crore in FY12, led PBT to grow at 31.3% CAGR in FY10-15 to
| 3246 crore. With new IRDA guidelines, from FY13, the life insurance
segment deteriorated, while the Bajaj Finance business, which picked up
from FY11 (10x rise in PBT from | 38 crore to | 310 crore) started
contributing higher proportion to PBT. General insurance also normalised
from FY13. Going ahead, we estimate consolidated revenues will grow at
14.6% CAGR in FY17-18E to | 27201 crore. Owing to increasing
profitability in finance segment, the bottomline is seen growing at a faster
pace at ~29.7% CAGR in FY17-18E to | 3145 crore.
Strong traction in commercial finance boosted the topline. Life insurance
business is showing some signs of pick-up with higher traction in
individual APE and sustained renewal premium. General insurance, post
turning to under writing profit in previous quarter, has turned negative led
by higher claims during the quarter.
Exhibit 1: Consolidated profit summary
Particulars
General Insurance
Life Insurance
Total Insurance
Investments & others
Windmill
Retail financing
Less: Inter-segment revenue
Total revenue
Interest and Finance Charges
Other Exp
Total Expenses
PBT
PAT

Q4FY14
1268
2140
3577
42
1
1095
7
4708
445
3057
3502
1206
708

Q1FY15
1177
795
2295
42
14
1246
7
3590
495
2437
2931
658
319

Q2FY15
1475
1401
2929
87
20
1242
51
4227
544
3043
3588
639
316

Q3FY15
1183
1442
3027
49
10
1486
12
4560
588
3224
3812
748
347

Q4FY15
1465
2379
4134
100
7
1445
11
5675
603
3872
4474
1201
707

Q1FY16
1322
1082
2773
59
14
1656
15
4487
665
2897
3562
925
467

Q2FY16
1500
1172
2966
103
23
1701
63
4730
689
3143
3832
898
441

Q3FY16
1348
1225
2955
54
10
2070
20
5069
734
3381
4115
954
437

Q4FY16
1730
2419
4336
105
11
1958
73
6337
790
4520
5310
1027
518

Q1FY17
1527
1004
2932
40
24
2304
34
5265
665
3457
4122
1143
538

Source: Company, ICICIdirect.com Research

Bajaj Finance is the highest profit making segment

with PAT growing at 39% CAGR in FY10-16 to
| 1279 crore

Healthy traction in finance book to continue in FY17-18E

Bajaj Finance is the highest profit making segment with PAT growing at
39% CAGR in FY10-16 to | 1279 crore in FY16. NII CAGR has been 36% in
FY10-15 while in the past three years it has been maintained above 30% at
32% to | 2872 crore as on FY15. Margins, on an average, have been above
10% over the past three to five years. Strong traction on the advances
front of 51% CAGR in the past five years and 36% CAGR in the past three
years has helped maintain NII traction.
Strong growth in PAT was seen at 54% YoY in Q1FY17 to | 424 crore led
by strong NII growth at 43% YoY to | 1283 crore. AUM grew 40% YoY at
| 49608 crore, largely led by the consumer finance segment, which

ICICI Securities Ltd | Retail Equity Research

Page 3

increased 47% YoY to | 21933 crore, followed by SME & commercial

segments, which were up 20% YoY & 74% YoY, respectively.
Based on leadership position in under penetrated & growing segments like
CD financing, lifestyle product financing, two-wheeler financing, LAP, etc,
which account for ~50% of its portfolio. Going forward, we expect AUM
growth at 32% CAGR to | 76890 crore in FY16-18E, led by CF segment
(35% CAGR) that will be driven by CD financing business. Enhanced
competition and growing risks in the LAP segment may keep traction in
the SME segment lower at 28% CAGR. NII is expected to grow at 32%
CAGR in FY17-18E to | 6992 crore. On the back of strong traction in NII
growth, declining cost to income ratio and credit costs, we expect BFL to
clock strong PAT CAGR of 35% in FY17-18E to | 2344 crore.
Exhibit 2: Consumer finance & SME to remain major contributor
120.0
100.0

0.5
10.8

0.8
10.2

1.0
10.3

1.5
9.7

1.7
10.0

2.7
11.0

3.0
11.8

3.4
12.1

49.2

47.2

48.0

46.8

46.9

44.1

42.3

40.3

39.5

41.8

40.7

42.0

41.3

42.3

42.9

44.2

Q2FY15

Q3FY15

Q4FY15

Q1FY16

Q2FY16

Q3FY16

Q4FY16

Q1FY17

(%)

80.0
60.0
40.0
20.0
0.0

Consumer Finance

SME Business

Commercial

Rural

Source: Company, ICICIdirect.com Research

Exhibit 3: Strong AUM traction boost performance in Q1FY17

| crore
NII
Total income
Total expenses
Provision
PBT
Loan outstanding

Q4FY14
553
584
306
62
277
24061

Q1FY15
680
558
343
83
321
26943

Q2FY15
626
564
319
80
299
28004

Q3FY15
824
561
392
108
393
30822

Q4FY15
741
584
375
114
345
32410

Q1FY16
895
576
453
103
422
35557

Q2FY16
897
601
441
137
428
37964

Q3FY16
1222
590
549
147
625
43452

Q4FY16
1015
628
506
157
489
44229

Q1FY17
1283
627
587
180
652
49608

Source: Company, ICICIdirect.com Research

Life insurance business to stabilise in two or three years

Individual premium has witnessed higher growth in

Q1FY17 at ~30% YoY forming 21.7% of NBP

ICICI Securities Ltd | Retail Equity Research

Bajaj Allianz Life Insurance (BALIC), a 74:26 JV between Bajaj Finserv and
Allianz SE recorded its first profit since FY10 of | 542 crore. The company
is now earning higher PAT of | 879 crore, after touching peaks of | 1311
crore. First year new business premium (NBP) growth has been under
pressure from FY09 onwards due to a slowing economy while declining
traction in Ulip from FY10 further impacted total premiums, to reach | 5844
crore in FY14 from over | 10600 crore in FY09. Going ahead, we expect
the life insurance business to remain on a slower track with share of
individual business improving gradually post FY17-18E. Hence, we expect
the premium to grow at 4.6% CAGR to | 6453 crore in FY17-18E.
The life insurance business Q1FY17 GWP growth declined at 7.2% YoY to
| 1004 crore, with new business premium growth declining at 14% YoY to
| 580 crore. Renewal premium grew 4% YoY to | 424 crore, partially

Page 4

supporting overall premium performance. Post change in regulatory

requirement of policyholders fund, PAT was at | 244 crore, up 1% YoY.
We factor in an improvement in the scenario with linked NBP from
individual growing at 18% CAGR to | 3401 crore and APE seen growing at
19.7% CAGR (on lower base) to | 2065 crore over FY16-18E.
Gross written premium (GWP) has de-grown at 20% CAGR from FY12-15
to | 6017 crore, on account of a decline in linked premium led by
surrenders. BALICs linked premium share in total premium declined from
highs of 94% in FY09 (| 9986 crore) to 29% (| 1746 crore) in FY15. On an
NBP basis, it has declined from 99% to 19% in FY15. Regulatory changes
in September 2010 along with a market correction led to an increase in
surrenders from | 4464 crore in FY11 to | 7250 crore in FY14. Accordingly,
AUM declined from | 32880 crore in FY11 to | 21287 crore in FY14. Going
ahead, an anticipated increase in AUM will assist interest income while
lower surrenders will boost persistency ratios. Therefore, after witnessing
a decline in PAT from FY13 to FY15 due to declining AUM, we expect PAT
to remain in positive territory ahead. However, based on subdued growth
in new business and renewal premium in FY16 and anticipation of gradual
recovery, we expect PAT growth to remain moderate at 3% in FY17E to
| 881 crore. Post FY17E, increase in topline and realignment of cost is
expected to lead to better profitable. Therefore, we expect PAT growth to
inch up to 10% YoY in FY18E to | 969 crore.
Exhibit 4: Life insurance premium (NBP)
13

11.8

12.1

11.3

11

(| Billion)

8.2
6.6

6.8

6.1

4.4

6.7
5.7
4.6

3.9

5.8

5.4

Q1FY17

Q4FY16

Q3FY16

Q2FY16

Q1FY16

Q4FY15

Q3FY15

Q2FY15

Q1FY15

Q4FY14

Q3FY14

Q2FY14

Q1FY14

Q4FY13

Source: Company Quarterly Presentation, ICICIdirect.com Research

With an APE decline, new business achieved profit (NBAP) margins

moderated from 14.3% to 11% in FY13 but surged again to 18% in FY15
on a lower APE base (APE excludes group superannuation business) that
slid to 16.6% in FY16 (as expected). We believe NBAP margins will
stabilise around 13-14% in the next two years.
Exhibit 5: Life business growth on slower track
Total premium
New business premium
Renewal premium
Policyholder profits
Shareholder profits*
Total profits
Solvency ratio (%)

Q4FY14
2140
817
1323
49
639
688
734

Q1FY15
796
394
402
115
0
115
785

Q2FY15
1401
610
791
140
103
243
802

Q3FY15
1442
572
870
76
99
175
782

Q4FY15
2379
1127
1252
71
488
559
761

Q1FY16
1082
674
408
142
99
241
788

Q2FY16
1172
460
712
151
65
216
809

Q3FY16
1225
538
687
49
142
191
797

Q4FY16
2419
1213
1206
133
99
232
793

Q1FY17
1004
580
424
75
169
244
817

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 5

General insurance growth to remain steady

Exhibit 6: General insurance business mix, share of retail segment remains at ~70%
Retail consists of ~70% of overall business while majority
comprises the motor business, which remains the core
strength of BAGIC

Others, 17%
Property and Eng,
13%

Motor, 56%
Health, 14%

Source: Company Quarterly Presentation, ICICIdirect.com Research

BAGIC has consistently grown over the last decade with gross direct
premium (GWP) growing at 18.2% CAGR in FY05-14, surpassing industry
growth of 15.1% during the same period. In FY15, BAGIC had GWP of
| 5230 crore, growing at 14% YoY compared to 10.1% for industry and
9.7% for private players. For FY16, growth has been at 11.3%, marginally
behind industry growth of 12.4%. The primary focus of the company is on
the retail segment with motor and health insurance forming a major pie
contributing ~70% of overall business. Motor continues to form 56% of
business mix.
With prudent underwriting practices and focus on preserving profitability,
BAGIC was able to report a steady improvement in combined ratio from
111% in FY11 to 96.7% in FY15, which led to underwriting profits of | 83
crore in FY15. In FY16, combined ratio has witnessed an up-tick at 99.3%,
owing to higher claims related to floods in Chennai. Also, provision due to
third party motor pool claims and exceptional provisioning for Motor
Decline Risk pool has been fully taken in FY14. This had impacted FY12
and FY13 profitability leading to losses (| 240 crore of transitional liability).
GWP growth remained healthy in Q1FY17 at 16% YoY to | 1527 crore.
After returning to positive territory in Q4FY16 with under-writing profit,
higher claim ratio at 72.4% (71% in Q4FY16 and 68% in Q1FY16) dented
performance with under-writing loss in Q1FY17. Consequently, PBT came
in at | 190 crore vs. | 214 crore YoY. Going ahead, we expect NEP, PAT to
continue steady growth at 14%, 13.9% CAGR to | 5600 crore, | 694 crore,
respectively.
Exhibit 7: Higher claims led to underwriting loss
Gross Premium
Net Earned Premium
Underwritting profit
Investment income
PBT
PAT
Claim Ratio (%)
Combined Ratio (%)

Q2FY15
1475
953
23
170
193
145
75
96

Q3FY15
1183
958
16
189
205
143
70
99

Q4FY15
1465
1000
20
177
197
144
71
95

| crore
Q1FY16
1322
999
28
186
214
147
68
96

Q2FY16
1500
1061
-8
213
205
141
73
99

Q3FY16
1348
1037
-116
211
95
68
77
109

Q4FY16
1730
1126
30
227
257
208
71
94

Q1FY17
1527
1138
-28
218
190
132
72
101

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 6

Outlook and valuation

Given Bajajs strong leadership in the domestic market and presence in
growing business verticals, we expect the entity to continue its focus on
improvement in earnings growth and sustenance of a healthy balance
sheet. Both insurance companies are yet to pay dividend. In case of
payouts, consolidated profits can see further upside not factored in
estimates. The same can improve return ratios further for the consolidated
entity. Going ahead, we expect consolidated revenue and PAT to grow at a
CAGR of 14.6% and ~29.7% to | 27201 crore and | 3145 crore,
respectively, over FY16-18E.
We remain positive on Bajaj Finance business model and growth
prospects ahead. On the insurance side, we expect double digit growth in
general insurance business, while life insurance is expected to pick up at a
gradual pace. Based on SOTP valuation, we revise our target price at
| 2900 per share for Bajaj Finserv, which implies a multiple of 14.7x on
FY18E consolidated earnings. The stock is available at P/E valuation of
13.3x FY18E earnings even post conservative forward estimates on life and
general insurance. Dividend from the insurance business can be an upside
risk. We maintain BUY rating on the stock.
Exhibit 8: Valuation on SOTP basis

Business
Bajaj Allianz Life Insurance
Bajaj Allianz General Insurance
Bajaj Finance
Windmill
Total

Basis
1.35x EV + 10x NBAP
16x PAT
5.1x BV
|6 per mw

Stake (%)
74
74
57.28
100

Value of
Value/
Business stake (|
share after 15%
Value
crore)
discount (|)
19489
14400
769
11107
8219
439
54456
31192
1666
410
410
26
2900

Source: ICICIdirect.com Research

Exhibit 9: Valuation summary

(Year-end March)
Net Profit (| crore)
EPS (|)
Growth (%)
P/E (x)
Price /Book (x)
RoA (%)
RoE (%)

FY13
1,572.4
98.8
6.9
26.6
5.4
2.5
24.4

FY14
1,547.7
97.3
(1.6)
27.1
4.5
2.2
18.1

FY15
1,689.8
106.2
9.2
24.8
3.8
2.0
16.7

FY16E
1,869.4
117.5
10.6
22.4
3.3
1.9
15.7

FY17E
2,377.3
149.4
27.2
17.6
2.8
2.1
17.0

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 7

FY18E
3,144.8
197.6
32.3
13.3
2.3
2.5
18.8

Recommendation history vs consensus

2,800
2,400

96.0
91.0

1,600

(%)

(|)

2,000

86.0
1,200
81.0

800
400

76.0
Jul-14

Sep-14

Dec-14
Price

Feb-15

May-15

Jul-15

Idirect target

Oct-15

Consensus Target Mean

Dec-15

Feb-16

May-16

Jul-16

% Consensus with BUY

Source: Bloomberg, Company, ICICIdirect.com Research

Key events
Date
FY07
FY07
FY08

Event
De-merger of erstwhile Bajaj Auto in 2007 and formation of Bajaj Finserv, the financial services arm of Bajaj Group
Induction of new management personnel from leading multinational companies
Diversification of lending portfolio begins vs. earlier legacy business of two & three wheeler financing and consumer durable financing

FY08

Launch of personal loan cross sell business and life insurance distribution business

FY10
Bajaj Allianz Life Insurance records its first profit of | 542 crore in FY10
FY11
General insurance business perofmance impacted by high motor claims. Construction equipment financing business launched
FY14
Introduction of new regulation by IRDA impacts life insurance profitability
FY15
General insurance business reports underwriting profit of | 83 crore
Source: Company, ICICIdirect.com Research

Top 10 Shareholders
Rank
1
2
3
4
5
6
7
8
9
10

Name
Bajaj Group of Industries
ICICI Prudential Asset Management Co. Ltd.
Jaya Hind Investments Pvt. Ltd.
Bajaj (Niraj)
Life Insurance Corporation of India
Bajaj (Rahulkumar)
The Vanguard Group, Inc.
Bajaj (Madhur)
Dimensional Fund Advisors, L.P.
Sundaram Asset Management Company Limited

Shareholding Pattern
Latest Filing Date
31-Mar-16
31-Mar-16
31-Mar-16
31-Mar-16
31-Mar-16
31-Mar-16
30-Jun-16
31-Mar-16
30-Apr-16
30-Apr-16

% O/S Position (m) Change (m)

54.44
86.6
0.9
4.52
7.2
5.2
4.02
6.4
0.0
2.02
3.2
1.8
1.99
3.2
0.0
1.04
1.7
0.0
0.72
1.1
0.0
0.59
0.9
0.0
0.46
0.7
0.0
0.41
0.6
0.0

(in %)
Promoter
FII
DII
Others

Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

58.4
58.4
52.0
52.0
58.4
7.2
7.8
17.9
17.2
6.7
8.4
7.8
11.7
12.2
8.4
26.1
26.1
18.4
18.6
26.5

Source: Reuters, ICICIdirect.com Research

Recent Activity
Buys
Investor name
ICICI Prudential Asset Management Co. Ltd.
Bajaj (Niraj)
Bajaj Group of Industries
Pictet Asset Management Ltd.
Capital Investment Trust Corporation

Value
133.04m
47.26m
22.46m
4.96m
3.54m

Shares
5.15m
1.83m
0.87m
0.19m
0.12m

Sells
Investor name
Norges Bank Investment Management (NBIM)
DSP BlackRock Investment Managers Pvt. Ltd.
HSBC Global Asset Management (India) Private Limited
Edelweiss Asset Management Ltd.
Mellon Capital Management Corporation

Value
-5.66m
-2.84m
-0.86m
-0.79m
-0.56m

Shares
-0.19m
-0.08m
-0.03m
-0.02m
-0.02m

Source: Reuters, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 8

Financial summary
Profit and loss statement
(Year-end March)
Revenue
Life Insurance
General Insurance
Total
Less: Reinsurance ceded
Reserve for unexpired risk
Net Insurance Premium Earned
Investment and other income
Total Insurance Income
Investment and others
Retail financing
Windmill
Total
Less: Inter-segment revenue
Total revenue
Pre-tax profit
General Insurance
Life Insurance
Total Insurance
Retail financing
Investments & others
Windmill
Total PBIT
Less: Interest
Profit before tax
Tax
Net profit before minority
Minority and deferred tax adjustments
Net profit

| Crore
FY15

FY16E

FY17E

FY18E

6017
5301
11318
1361
177
9779.8
2605.5
12385.2
278.7
5418.3
50.3
18132.5
81.5
18051

5896
5901
11796
1351
348
10097.2
2935
13032
307
7382
57
20778
82
20696

6075
6668
12743
1716
233
10793.4
2756.9
13550.3
321.9
9655.3
68.8
23596.2
83.1
23513

6453
7568
14021
1870
227
11923.8
2452.5
14376.3
338.0
12491.7
79.1
27285.1
83.9
27201

777
1007
1784
1368
63
32
3246
63
3246
-837
2409
719
1690

771
983
1754
1964
86
32
3836
86
3836
-1052
2784
915
1869

910
1013
1923
2567
113
39
4642
113
4642
-1270
3372
995
2377

992
1114
2106
3568
118
45
5837
118
5837
-1376
4461
1316
3145

FY15
2618.8
159.1
106.2
689.6
2.0
16.7
3.8
24.7

FY16E
2618.8
159.1
117.5
805.3
1.9
15.7
3.3
22.3

FY17E
2618.8
159.1
149.4
953.0
2.1
17.0
2.7
17.5

FY18E
2618.8
159.1
197.6
1148.9
2.5
18.8
2.3
13.3

FY15

FY16E

FY17E

FY18E

3.0
15.6
36
18
16
9

-2.0
11.3
37
17
15
11

3.0
13.0
32
18
14
27

6.2
13.5
32
21
16
32

Balance sheet

| Crore

(Year-end March)
Sources of Funds
Shareholders' Funds
- Share capital
- Reserves & Surplus
Policy liabilities
Provision for linked liabilities
Funds for future appropriation in policyholders' account
Minority interest
Loan funds
Defered tax liability (net)
Current liabilities
Provisions
Total liabilities

FY15

FY16E

FY17E

FY18E

1097
80
10894
14606
21645
124
4261
26691
11
13017
187
91515

1281
80
12735
17026
21449
341
5176
37024
11
13603
195
107639

1516
80
15085
19104
20332
358
6171
47965
11
14215
203
123524

1828
80
18201
16563
24845
376
7486
47965
11
14855
211
130594

Applications of Funds
Fixed assets
Goodwill on investments in associates
Investments
Policyholders' Investments
Assets held to cover linked liabilities
Deferred Tax Assets (net)
Current assets
- Receivable under financing activity
Misc Expenditure
Total Assets

1404
429
14526
14438
21645
188
7686
31199
0
91515

1443
429
16623
16685
21449
198
8056
42756
0
107639

1509
429
18581
18722
20332
207
7304
56438
0
123524

1239
429
9528
19796
22304
218
2752
74329
0
130594

Source: Company, ICICIdirect.com Research

Source: Company, ICICIdirect.com Research

Key Ratio
(Year-end March)
CMP
No. of shares in mn
EPS
BV
RoA
RoE
P/BV
P/E
(Year-end March) - Growth ratios
Gross Written Premium
- Life
- General
Loan book Bajaj Finance
Consol Networth
Consol Revenues
Consol PAT

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 9

ICICIdirect.com coverage universe (NBFC)

Sector / Company
LIC Housing Finance (LICHF)
Reliance Capital (RELCAP)
HDFC (HDFC)
PTC India Financial Services
(PTCIND)
CARE (CARE)
Bajaj Finserv (BAFINS)
Bajaj Finance (BAJAF)

CMP
(|)
516
433
1,375

TP(|) Rating
550 Hold
481
Buy
1,370
Buy

42

43

Hold

968
2,619
9,778

1,400
2,900
8,230

Buy
Buy
Buy

EPS (|)
P/E (x)
P/ABV (x)
RoA (%)
RoE (%)
M Cap
(| Cr) FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E
26,093 32.9 39.3 46.4 15.7 13.1 11.1
2.9
2.4
2.0
1.4
1.4
1.5 19.6 19.6 19.1
10,539 43.5 41.6 42.4
9.9 10.3 10.1
0.8
0.8
0.7
1.8
1.5
1.4
7.5
6.6
6.4
216,961 45.0 46.7 53.4 30.6 29.4 25.8
6.5
5.8
5.3
2.6
2.4
2.4 21.8 20.6 21.3
2,365

2.9

7.0

4.8

14.5

6.0

8.7

1.5

1.2

1.1

2.6

5.0

3.1

11.5

24.9

15.1

2,807 48.4 40.0 44.8

41,701 117.5 149.4 197.6
52,437 246.2 307.2 387.5

20.0
22.3
39.7

24.2
17.5
31.8

21.6
13.3
25.2

7.8
3.3
6.9

7.0
2.7
5.9

6.5
2.3
4.9

43.2
1.9
3.2

40.9
2.1
3.2

42.6
2.5
3.1

38.9
15.7
21.0

28.8
17.0
20.4

30.3
18.8
21.2

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 10

RATING RATIONALE

ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns

ratings to its stocks according to their notional target price vs. current market price and then categorises them
as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional
target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;

Pankaj Pandey

Head Research

pankaj.pandey@icicisecurities.com

ICICIdirect.com Research Desk,

ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai 400 093
research@icicidirect.com

ICICI Securities Ltd | Retail Equity Research

Page 11

ANALYST CERTIFICATION
We /I, Kajal Gandhi, CA, Vasant Lohiya, CA and Vishal Narnolia, MBA Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research
report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s)
or view(s) in this report.

Terms & conditions and other disclosures:

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and is, inter alia, engaged in the business of stock brokering and distribution of financial products. ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is Indias largest private sector bank and
has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. (associates), the details in respect of
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and other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts
and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover.
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meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without
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ICICI Securities Ltd | Retail Equity Research

Page 12