Mumbai-based financial services conglomerate Bajaj Finserv has announced its consolidated financial results for the December quarter, revealing a profit after tax (PAT) of Rs 2,229 crore. This figure remains nearly unchanged compared to the Rs 2,231 crore reported in the same period last year, presenting a flat growth trajectory on the surface.
Underlying Performance Shows Robust Growth
However, a deeper analysis uncovers a much stronger operational performance. The reported numbers were significantly impacted by higher provisions and one-time charges related to regulatory changes. When these exceptional items are excluded, the consolidated profit after tax actually surged by an impressive 32% year-on-year, reaching Rs 2,936 crore. This indicates that the core businesses of the group are experiencing healthy expansion and profitability.
Bajaj Finance: Provisions Mask Strong Fundamentals
The group's flagship lending arm, Bajaj Finance, reported a decline in its stated profit after tax to Rs 3,978 crore from Rs 4,246 crore in the year-ago quarter. This drop is primarily attributed to increased provisioning measures. Excluding the effects of accelerated expected credit loss (ECL) provisions and a one-time labour code implementation charge, the underlying profit after tax for Bajaj Finance demonstrated a robust 23% growth, climbing to Rs 5,227 crore.
Insurance Subsidiaries: Mixed Results with Positive Trends
The performance across Bajaj Finserv's insurance verticals presented a mixed picture. Bajaj Housing Finance, the mortgage lending subsidiary, reported a solid 21% increase in profit after tax, which stood at Rs 665 crore for the quarter.
Bajaj General Insurance posted a profit after tax of Rs 399 crore, marginally lower than the Rs 400 crore recorded a year earlier. After adjusting for the one-time labour code charge, the profit after tax showed an 8% increase to Rs 430 crore. The company also reported a 12% rise in gross written premium to Rs 7,389 crore, while its combined ratio improved to 97.9% from 101.1%, indicating better operational efficiency.
Bajaj Life Insurance reported a quarterly loss of Rs 31 crore, a stark contrast to the profit of Rs 222 crore in the same quarter last year. However, excluding the one-time labour code charge, the profit after tax would have been Rs 12 crore. Importantly, key operating metrics showed significant improvement, with the value of new business soaring by 59% year-on-year to Rs 405 crore.
Impact of Provisions and Regulatory Charges
During the quarter, the group undertook substantial financial adjustments that affected its bottom line. These included an accelerated ECL provision of Rs 1,406 crore and a one-time charge of Rs 379 crore towards the implementation of new labour codes. Collectively, these items reduced the consolidated profit after tax by Rs 707 crore, explaining the flat reported growth despite strong underlying business performance.
Strategic Acquisition Completed
In a significant corporate development, Bajaj Finserv completed the acquisition of Allianz SE's 23% stake in its general and life insurance subsidiaries in January. This strategic move increases Bajaj Finserv's holding to 75.01% in both insurance companies, granting it greater control and alignment. The financial impact of this transaction will be reflected in the company's accounts starting from the acquisition date, potentially influencing future quarterly results.
The December quarter results for Bajaj Finserv highlight a complex financial landscape where regulatory adjustments and provisioning have temporarily masked the strong fundamental growth across its diverse business portfolio. The underlying trends suggest resilience and expansion in key segments, positioning the conglomerate for potential future growth as these one-time impacts normalize.
