Bajaj Finserv Ltd (BAJAJFINSV) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Your pass code has been confirmed. Please wait while you are joined to the conference. The conference is now being recorded.
Moderator: Ladies and gentlemen, good day and welcome to the Q2 and FY '27 Analyst Conference Call for Bajaj Finserv Limited, hosted by JM Financial Institutional Securities Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing "*", then "0" on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ajeet Kumar from JM Financial Institutional Securities Limited. Thank you, and over to you, sir.
Ajeet Kumar (JM Financial Institutional Securities Limited): Thank you, Rahul. Good evening, everyone, and welcome to the Q2 FY '27 earnings conference call of Bajaj Finserv Limited. First, I would like to thank the management of Bajaj Finserv for giving us the opportunity to host this call. We will have the opening comments from the management team, post which we will open the floor for Q&A. From the management side today, we have Mr. Tapan Singhel, MD and CEO, Bajaj General Insurance Limited; Mr. Tarun Chugh, MD and CEO, Bajaj Life Insurance Limited; Mr. Ashish Panchal, MD and CEO, Bajaj Finserv Direct Limited, and Group Strategy Head, Bajaj Finserv Limited; Mr. Deepak Matey, CEO, Bajaj Finserv Health Limited; Mr. Ganesh Mohan, MD, Bajaj Asset Management Limited; Mr. S. Sreenivasan, President Insurance and Special Projects; Mr. Ramandeep Singh Sahni, CFO, Bajaj Finserv
Ajeet Kumar (JM Financial Institutional Securities Limited): Mr. Vinit Bansal, CFO, Bajaj Life Insurance Limited. Mr. Avesh Karmali, CFO, Bajaj General Insurance Limited. With this, I would handover the floor to Ramandeep sir for his opening comments. Thank you and over to you, sir.
Ramandeep Singh Sahni (Bajaj Finserv Limited): Thank you. Good evening everybody. We welcome you to the conference call to discuss the results of Bajaj Finserv Limited BFS for Q2 FY27. As before, in this call, we will largely be concentrating on the consolidated results of Bajaj Finserv. The results of our insurance operations through Bajaj General and Bajaj Life Insurance Limited. Our emerging companies, which include Bajaj Finserv Health, Bajaj Finserv Direct and Bajaj Asset Management Company. And lastly where material, the standalone results of Bajaj Finserv. Bajaj Finance and Bajaj Housing Finance are other two material subsidiaries have already had their conference calls, and hence we will pursue only very high-level questions on these companies. To start with a few hygiene points, as a word of caution, we affirm that any statements that may look forward-looking statements are just estimates and do not constitute an assurance or indication of any future performance results. On the basis of accounting, as required by the regulation, Bajaj Finserv prepares its financials in compliance with Ind AS. The insurance companies are however, currently not covered under Ind AS, since we have sought one-year forbearance from the regulator. Therefore, Bajaj General and Life have prepared Ind AS financials on Ind AS 104 basis only for the purpose of consolidation. And the standalone numbers for them are based on non-Ind AS accounting standard, which is referred as Indian GAAP, as applicable to insurance companies today. Further on this subject, in line with the recent regulations from IRDAI, both the insurance company would transition to Ind AS from 1st of April 2027. Additionally, regarding the recently published consultation paper by IRDAI on recalibrating economics of insurance distribution, we appreciate and support the IRDAI's intention of fostering a customer-centric, competitive, efficient, and transparent distribution ecosystem. As this is a consultation paper at this stage, it would be followed by draft regulations for comments, and then the final regulation shall be issued. Hence, in that sense, it would be premature to come to any conclusion basis this consultation paper. However, as been as has been seen in the past, any large-scale initiative which aims to improve the customer proposition may lead to short-term impact for the insurers as well as distributors, in this case. However, in the medium to long-term, the sector only bounces back much stronger as has been seen during the past, in terms of the GST exemptions or you know, various changes on ULIP norms which we've seen in the past, or surrender value changes, and so on. We hence continue to support any initiative which improves the customer proposition and expands insurance coverage. As part of IRDAI's reach out to seeking feedback on the paper, our insurance companies have also been providing necessary feedback to the authorities. I'll now move to giving a high-level update on the consolidated financial results for the quarter which have been put out in the press today. The consolidated total income grew 17% to 43,416 crore. The consolidated profit after tax grew a healthy 25% to 5,952 crores. The consolidated profit after tax attributable to the owners grew 23% to 2,758 crores. Let me now deep dive and give you further texture on the performance of each of our companies. I'll start with Bajaj General. GWP for Bajaj General grew at 10% for the quarter to about 7,560 sorry 56 crores, which is marginally lower than the industry growth of about 12%. However, if you were to exclude the bulky tender driven crop and government health business, the GWP for the company increased by a very healthy 21%, which is significantly higher than the industry growth of close to 13%. This was primarily driven by the health and the motor segments, which grew at 31% and 18% respectively. The underwriting loss for the company stood at 115 crores for the quarter, as against 92 crores for the same quarter last year. This was largely impacted due to the Nat Cat claims of 75 crores net during the quarter.
Ramandeep Singh Sahni (Bajaj Finserv Limited): Accordingly the combined ratio was also elevated at 104.5% for the quarter as against 102.3% for the same period last year. The combined ratio excluding Nat Cat claims is around 102%. And if we were to exclude both Nat Cat claims, as well as the impact of 1/n regulations, which is only a temporary difference, the combined ratio stands at 101.4%. PAT for the company grew at sorry de-grew for the quarter at 420 crores versus 517 crores for the same period last year. This was largely attributable to lower capital gains due to the volatile equity markets and the challenging external macro environment. It is also impacted by what I indicated earlier, Nat claim Nat Cat claims of net 75 crores. And there is also a impact of about 50 crores due to the capital reduction we've done through buyback and dividend in the last 6 months. The annualized ROE for the company at 200% surplus sorry, 200% solvency stands at 16.2%. AUM as of 30th September stood at 36,313 crores versus 34,974 crores for the same period last year. The lower growth in AUM is largely attributable to the buyback and the dividend payout last quarter, totaling to close to 3,500 crores. In summary, these operating results underscore Bajaj General's disciplined focus on delivering balanced and profitable growth in the most challenging, difficult and highly competitive market. I'll now move to Bajaj Life. Bajaj Life's financial outcomes are in line with the plan for sustainable and profitable growth. The retail weighted received premium grew at 5% to about 1,942 crores. Growth was milder compared to the industry, however, that came with a continued increase in term mix, which went up by about 3.4%, which is at which has a lower ticket size. Retail protection contributed to 11% on the overall retail business, growing at a significant 51% year-on-year. Group protection business also registered a very healthy growth of 81% for the quarter. The VNB for the quarter grew 40% to 512 crores, and the NBM was up at 21.6% for the quarter as against 17.1% for the same quarter last year, an expansion of healthy 4.5%. I'm also happy to inform that on a rolling 12-month basis, despite the impact of GST, our life insurance business has crossed the NBM of 20% and ended at 20.8%. Bajaj Life's GWP grew at a healthy 23% during the quarter, which includes a renewal premium growth of 17%. We have been seeing some persistency dips over certain cohorts, which is in line with the industry, and the company is making efforts to improve the same. On retail weighted received premium basis, the product mix for the quarter continued to be well balanced as has been seen in the last few quarters. Profit after tax for the company was at about 13 crores as compared to sorry, was at 55 crores as compared to 13 crores for the same period last year. However, the PAT growth was on a lower base since last year, we had a one-time GST impact of 112 crores partially offset by lower capital gains attributable to the external macro environment. Bajaj Life ended the quarter with an AUM of 146,322 crores, up 11%. Bajaj Life has also commenced operations in GIFT City in the month of October and is also expected to start the retail business with IndusInd Bank from Q3 of this year. Overall, the quarter for Bajaj Life has been good and in line with our expectations. We continue to reap the benefits our revamped strategy of Bajaj Life 2.0, which is focused on sustainable and profitable growth. Finally, both the insurance company continue to be financially strong with the solvency of Bajaj Life at 255% and General at about 230%, and are well poised to weather any ex- external adversity. Let me now move to our lending businesses, Bajaj Finance and Housing Finance. Starting with Bajaj Finance, an excellent quarter across all key metrics. The number of new loans booked grew 11% to 1.3
Ramandeep Singh Sahni (Bajaj Finserv Limited): crores for the quarter. The company's diversified business model has enabled it to record a strong AUM growth of 26% for the quarter at about 5,84,000 crores. The net total income grew by 23% to 15,974 crores. Profit after tax was at about 6,267 crores, registering a very healthy growth of 29%. Opex to net total income was flat at 33% for the quarter. However, with visibility of green shoots in operating efficiencies due to AI implementation, the company is confident of improving the Opex to NTI ratio by 25 to 40 bps in FY27. Loan losses and provisions in the quarter were at 2,166 crores as against 2,080 crores for the same quarter last year. Quarter 2 also includes a prudent management and macroeconomic provision of close to 340 crores. Loan losses to AUF ratio declined to 1.56% this quarter versus 1.88% for the same period last year. Accordingly, the gross and net NPAs stood at 1.06% and 0.42% respectively, much lower than the same period last year. Capital adequacy remains strong at 20.3% as at 30th September. On 1st October '26, Bajaj Finance's board has also approved an additional capital raise of 11,700 crores through equity shares by QIP to qualified institutional buyers, and 5,800 crores through preferential issue of warrants convertible into equivalent number of equity shares to Bajaj Finserv Limited. The BFL board's decision on raising additional capital, subject to shareholders' approval, is driven by various factors, including the strong India growth story, underlying growth momentum of the company and its subsidiaries, and increasing focus on building resilience across various dimensions of business. I'll now move to Bajaj Housing Finance, our mortgage subsidiary of Bajaj Finance. Overall, a good quarter across growth, asset quality, and profitability metrics. The company surplus the landmark milestone of 1.5 lakh crores of AUM. AUM grew by 25% year-on-year. The growth was very well distributed across all business segments, including home loans, which grew at 22%, loan against property grew at 26%, LRD at 39%, and developer finance at 13%. The net interest income grew 20% to about 1,055 crores. The operating efficiencies continued to improve, with Opex to net total income at healthy 19.1% as against 19.7% for the same period last year. Healthy asset quality continued to be maintained, with the gross and net NPA of point of 29 and 12 bps respectively as of for 30th September '26 in line with the same period last year. PAT grew by 18% to 757 crores on account of higher variable fee income, operating efficiencies on Opex, and lower credit cost during the quarter. Capital adequacy ratios stood at 21.2% as on 30th September. In summary, another very strong quarter for both our lending companies, BFL and BHFL. Now, I'll give you an update on the emerging companies to start with on Bajaj Finserv Health. Bajaj Finserv Health executed about 5.7 million health care transactions during the quarter. However, revenue for the quarter registered a degrowth on account of restructuring required in some partnerships attributable to the RBI's revised circular on business conduct by NBFCs. The company is, however, trying to mitigate this issue, specifically given the impact of revenue for some of these parties coming from the distribution reforms. So, we'll have to wait and watch how the H2 for the company plays out given the impact of these two circulars. Bajaj Finserv Health continues its expansion of provider network, which includes 1,30,000-plus doctors, 32,000-plus hospitals, and 10,000-plus lab touch points. Utilizing this network strength and its tech platform, Bajaj Health is able to offer integrated OPD, IPD, and wellness experience to both retail and as well as corporate customers. I'll now move to Bajaj Markets. The total disbursements for the quarter stood at 2,500 crores as against 2,269 crores in Q2 FY26,
Ramandeep Singh Sahni (Bajaj Finserv Limited): in quarter one, and 1,549 crores for the same quarter last year. The company ended the quarter with a total unique partner count of 106. Operating revenue for the company has increased to 120 crores in quarter two with a healthy growth of 45%. Revenue is back on growth trajectory after the planned digital customer journey enhancements which impacted growth in the last year. Further, some of our revenue structures are now trail revenue based, providing stability, predictability, and non-linearity to future revenue. The company is now on track to hit the planned break-even target for the quarter in quarter four of this year. I'll now move to asset management company. The asset management company sustained its strong growth momentum in the quarter, crossing the 40,000 crore AUM milestone before closing the quarter at about 35,760 crores. Registering a robust 24% growth year-on-year. Bajaj AMC retained the 26% spot amongst all mutual funds in India in terms of AUM. Within the AUM, equity mix for the company stands at a healthy 60% and the non-group share of AUM constitutes about 91% of the total AUM. Further, the company's incremental SIP books saw a surge of 42% with SIP folios also increasing 41% year-on-year, reflecting sustained investor confidence and strengthening retail participation. On the other emerging businesses, with respect to the alts business, happy to confirm that we've commenced business operations with the launch of our PMS business, and the first close of our real estate AIF has happened in the quarter. With respect to the reinsurance business, we are in the process of filing for necessary approvals with IRDAI. That's from my side on the performance updates. Before we open the floor for questions, considering the paucity of time, I would request the audience to kindly keep the questions brief so that we can cover more participants during this call. With this, I invite questions from the audience.
Moderator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants who wish to ask questions, please press star and one. The first question is from Mahek from Emkay. Please go ahead.
Mahek (Emkay Global Financial Services): Yeah. Hi. Good evening and thank you for the opportunity. So, I have a couple of questions. So, first I'll take on the general insurance company. So, basically, we have seen an increase in the loss ratio for the health segment. So could you just help us with some color on which segment particularly is driving this increase in the claims ratios? And secondly on on the motor, as well, we have seen higher loss ratio due to Nat Cat events. So could this you know kind of lead to a lower retention ratio going forward for for the motor segment? So, these two are my questions on general insurance, I'll take the life insurance later.
Ramandeep Singh Sahni (Bajaj Finserv Limited): Avez, you want to take that?
Avesh Karmali (Bajaj General Insurance Limited): Sure. So, thank you for your question and good evening. The loss ratio on health is an overall I would recommend you look at it on an overall basis and we there you would have to see then the NEP mix. And essentially what you're seeing is there the NEP mix for the quarter has come higher from our tender business. Now tender business, one has to look at it holistically where you see that it comes at a much lower expense ratio. So, from a combined perspective, the loss ratio in health is something that we envision will come down because the tender business is, you know, two plus one as we mentioned it before. On the motor side, as you said it is driven by cat and therefore, we expect it to not continue at the rate as it is in the next quarter. In terms of retention, that is something that is looked at annually and we will make that strategic decision at the end of the year. I hope I've answered both of your questions.
93 more turns of this transcript: log in to Stocksigma to read the full call.