Bajaj Finserv rose 1.39% to Rs 6,470 after the company's consolidated net profit jumped 44% to Rs 1,215 crore on 16% rise in total income to Rs 14,192 crore in Q1 June 2020 over Q1 June 2019.
Profit before tax (PBT) stood at Rs 2,568.08 crore in Q1 FY21, up by 13.9% from Rs 2,255.24 crore in Q1 FY20. Total tax expense fell 19.37% YoY to Rs 645.86 crore during the quarter.
Bajaj Finserv (BFS) is the holding company for the various financial services businesses under the Bajaj group. BFS holds 52.82% stake in Bajaj Finance and 74% stake in Bajaj Allianz General Insurance Company and Bajaj Allianz Life Insurance Company.
The spread of the COVID-19 pandemic resulted in a sudden and steep fall in the value of shares traded on the stock exchanges in Q4 FY20. As on 30 June 2020, the Nifty 50 index and BSE 200 index have recovered 20% from 31 March 2020 level. Under Ind AS, the insurance subsidiaries have chosen to hold equity securities as fair value through profit and loss account and therefore, the insurance companies had an unrealised mark-to-market (MTM) pre-tax gain of Rs 556 crore in Q1 FY21, while in Q4 FY20, there was a MTM loss of Rs 768 crore.
Additionally, Bajaj Finance made a pre-tax provision of Rs 1,450 crore in the form of contingency provision during Q1 FY21, on account of the impact of COVID-19. The same is over and above the provision considered of Rs 900 crore in FY20 and other usual and necessary provisions for NPAs.
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The MTM adjustments of the insurance businesses and the contingency provision of BFL, together considered as unusual items, after adjusting for tax and the company's interest in those subsidiaries have negatively impacted consolidated profit after tax of BFS for Q1 FY21 by Rs 244 crore.
Bajaj Finance's profit after tax (PAT) stood at Rs 962 crore in Q1 June 2020, down by 19% from Rs 1,195 crore in Q1 June 2020. It reported significantly lower disbursements in the current quarter as well as constraints on recovery of dues from the customers due to the lockdown restrictions and moratoriums announced by the Reserve Bank of India. The company remains one of the most adequately capitalised amongst large NBFCs in India with a healthy liquidity position.
Bajaj Allianz General Insurance Company's net profit surged 88% to Rs 395 crore in Q1 FY21 from Rs 210 crore in Q1 FY20. While its gross written premium was lower due to decline in sales of vehicles, travel insurance and tenders for government health business, its underwriting result improved significantly.
Bajaj Alianz Life Insurance Company's shareholders' profit after tax soared 110% to Rs 130 crore in the June quarter from Rs 62 crore reported in the same period last year. The life insurance business maintained its topline in terms of individual rated new business premium at the same level as the previous year as compared to industry's de-growth of 18%.
"Faced with COVID-19 and the subsequent lockdowns, the company and its subsidiaries took immediate steps to handle this extreme situation. The company and its subsidiaries are navigating through this challenge, with focus on profitability over growth. They are conserving cash, borrowing long-term, strengthening collections and reducing overheads. As a result, the operating companies have strong solvency, well above the required capital," BFS said in a statement.
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