Rahul Bajaj steps down as Bajaj Finance's chairman; stock ends 4% lower

Shares of Bajaj Finance tumbled as much as 8.4 per cent from day's high to hit an intra-day low of Rs 3,220 apiece on the BSE on Tuesday after the company informed the exchanges that Rahul Bajaj has decided to step down as the chairman.

The stock, however, partially recovered and ended 4.3 per cent lower at Rs 3,293 per share on the BSE. In comparison, the bechmark S&P BSE Sensex settled 511 points, or 1.4 per cent, higher at 37,930 levels. 

"Rahul Bajaj, Non-Executive Chairman of the Company, having been at the helm of the Company since its inception in 1987 and the Group for over five decades, as part of succession planning, has decided to demit the office as Chairman of the Board w.e.f. close of business hours on July 31, 2020. "He would, however, continue to serve the Company as a Non-Executive Non Independent Director," it said. READ HERE

The board has appointed Sanjiv Bajaj, currently the Vice Chairman of the Company, as Non-Executive Chairman of the Company with effect from August 1, 2020, in place of Rahul Bajaj.

June Quarter Result

The non-bank finance company's (NBFC's) standlone net profit came in at Rs 869.5 crore for the April-June quarter of FY21 (Q1FY21) compared to Rs 1,124.73 crore clocked in the corresponding quarter of the previous fiscal. Sequentially, the profit slipped 2.4 per cent from a profit of Rs 891.57 reported in the March quarter of FY20 (Q4FY20).

It's profit before tax, meanwhile, came in at Rs 1,183.97 crore, down 32.11 per cent YoY, from Rs 1,744.04 crore reported in Q1FY20. In Q4FY20, the same was Rs 1,204.81 crore.

On a consolidated basis, the net profit came in at Rs 9,62.32 crore, down 19.4 per cent YoY, from Rs Rs 1,195.25 crore in the corresponding quarter last year. The consolidated PBT stood at Rs 1,309.69 crore at the end of JUne quarter of FY21.

Total income jumped 14.5 per cent to Rs 6649.74 crore in Q1FY21 as against Rs 5807.76 crore in the same period last year. 

"Our business operations in Q1FY21 were considerably impacted due to Covid-19 pandemic and the consequent lockdown which remained in force for the most of the quarter. It has resulted in significantly lower business acquisition and constraints on recovery of overdues from customers," the management said in a statement.

It's consolidated asset under management increased 7 per cent YoY to Rs 1,38,055 crore during the quarter under review.

"The company restarted its urban B2B, rural B2B, auto finance, gold loans and loan against securities businesses from 10 May, 2020 with stringent loan to value (LTV) and underwriting norms and focus on existing customers. The company restarted its home loans and credit card distribution businesses from June 2020. The company deferred restart of other businesses viz. loan against property, SME, urban B2C, rural B2C and commercial businesses to July 2020 due to extension of moratorium," it said.

The management said new loans booked during Q1FY21 declined by 76 per cent to 1.75 million from 7.27 million in Q1FY20. Customer franchise as of 30 June 2020 increased by 16% to 42.95 million from 36.94 million as of 30 June 2019. 

Besides, the consolidated moratorium book reduced to Rs 21,705 crore (or 15.7 per cent of AUM) from Rs 38,599 crore (or 27 per cent of AUM) as of April 30, owing to reduction in bounce rate coupled with better collection efficiency.

Loan losses and provisions for Q1FY21 was Rs 1,686 crore as against Rs 551 crore in Q1FY20. During the quarter, the company made an additional contingency provision of Rs 1,450 crore for Covid-19 taking the overall contingency provision for Covid-19 to Rs 2,350 crore as of 30 June 2020.