Equity L/S Analyst | Forensic Accounting | India, Yellowstone Equity

Ankit Agrawal, CFA

Equity L/S Analyst | Forensic Accounting | India

Creating Wealth through Alpha and Compounding

Yellowstone Equity

Providing unbiased and independent research on Indian equities to global institutions and individual investors


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Regulatory Disclosure: 
Note that Ankit Agrawal (Proprietor of Yellowstone Equity) is a SEBI registered Research Analyst (Registration No.: INH000007216). Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. Investment in securities market are subject to market risks. Read all the related documents carefully before investing.

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Compliance/Grievance Officer:
Name: Ankit Agrawal
Email: services@yellowstoneequity.com
Mobile: +91-7575817289
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Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/bajaj-finance-ltd" target="_blank" data-smartkarma-citation="entities:8950:1" rel="noopener">Bajaj Finance Ltd (BAF IN)</a> reported record quarterly profit of INR 2,125cr on the back of strong growth in AUM and improving asset quality.</li>
<li>BAF has launched its Phase 1 digital transformation. This quarter, it shared detailed updates around it. It is now working on year-long step-wise Phase 2 launch.</li>
<li>With liquidity buffer normalizing, asset quality improving, and customer acquisition accelerating led by digital initiatives, we believe BAF is at an interesting inflection point.</li>
</ul>



Bajaj Finance Ltd (BAF IN) reported record quarterly profit of INR 2,125cr on the back of strong growth in AUM and improving asset quality.
BAF has launched its Phase 1 digital transformation. This quarter, it shared detailed updates around it. It is now working on year-long step-wise Phase 2 launch.
With liquidity buffer normalizing, asset quality improving, and customer acquisition accelerating led by digital initiatives, we believe BAF is at an interesting inflection point.


Bajaj Finance: Gearing Up To Become India's Dominant Fintech

External broker reports(aggregated public sources), ICICI Securities Ltd

ICICI Securities Limited

External broker reports(aggregated public sources)

ICICI Securities Ltd

ICICI Securities Limited provides investment services. The Company provides corporate and investment banking, securities, wealth management, retail brokerage, initial public offerings, and advisory services. 

Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

<ul>
<li>Bajaj Finance is a dominant player in the consumer finance space while it has also made a foray into various lending segments wherein housing has grown to a significant size</li>
<li>Consumer business forms ~34% of overall consolidated AUM</li>
<li>We roll over our valuations and arrive at a TP of Rs 9500 by valuing the business at ~8.4xFY24E ABV.</li>
</ul>
<div class="content-highlight"><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></div>


Bajaj Finance is a dominant player in the consumer finance space while it has also made a foray into various lending segments wherein housing has grown to a significant size
Consumer business forms ~34% of overall consolidated AUM
We roll over our valuations and arrive at a TP of Rs 9500 by valuing the business at ~8.4xFY24E ABV.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Bajaj Finance: Stellar Show, Beats Estimates, Improved Visibility

External broker reports(aggregated public sources), Axis Direct

Axis Direct

Axis Direct is the flagship brand under Axis Securities Limited, a subsidiary of Axis Bank in India. 

Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

<ul><li>Bajaj Finance (BAF) Q3FY22 performance was robust, led by higher AUM growth of 9% QoQ (partly on account of festive demand) and PAT growth of 44% QoQ</li><li>The company’s AUM growth accelerated driven by traction across products (barring auto)</li><li>However, valuations are expensive and hence we retain our HOLD rating with a target price of Rs 8,190/share</li></ul><div class="content-highlight"><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></div>

Bajaj Finance (BAF) Q3FY22 performance was robust, led by higher AUM growth of 9% QoQ (partly on account of festive demand) and PAT growth of 44% QoQThe company’s AUM growth accelerated driven by traction across products (barring auto)However, valuations are expensive and hence we retain our HOLD rating with a target price of Rs 8,190/shareContent is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Bajaj Finance: Strong Quarter; Stretched Valuations

External broker reports(aggregated public sources), Motilal Oswal Financial Services Limited

Motilal Oswal

Motilal Oswal Financial Services Limited

Motilal Oswal Financial Services Limited is an Indian diversified financial services firm offering a range of financial products and services. 

Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

<p>While NII rose 41% YoY to INR47.3b (6% beat), due to higher interest income from IPO financing and lower negative carry, it was slightly mitigated by higher opex (up 50% YoY and 9% above our estimate). Credit costs stood at INR10.5b (est. INR11.5b), which included an additional management overlay of INR2.5b in 3QFY22. GNPA/NNPA ratio improved by ~72bp/~32bp QoQ to 1.73%/0.78%. OTR book classified under Stage 2 stood at INR14.53b (~80bp of AUM).</p><div class="content-highlight"><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></div>

While NII rose 41% YoY to INR47.3b (6% beat), due to higher interest income from IPO financing and lower negative carry, it was slightly mitigated by higher opex (up 50% YoY and 9% above our estimate). Credit costs stood at INR10.5b (est. INR11.5b), which included an additional management overlay of INR2.5b in 3QFY22. GNPA/NNPA ratio improved by ~72bp/~32bp QoQ to 1.73%/0.78%. OTR book classified under Stage 2 stood at INR14.53b (~80bp of AUM).Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Strong beat driven by all-round healthy business momentum

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

<ul>
<li>India moves to largest underweight country holding among EM Value managers.  Current underweight the highest on record.</li>
<li>Among Value managers, India saw net fund outflows of $322m, the underweight increase by -1.92% and a further 7.7% of managers move to underweight over the last 6-months.</li>
<li>
<a href="https://www.smartkarma.com/entities/reliance-industries-ltd" target="_blank" data-smartkarma-citation="entities:198:1" rel="noopener">Reliance Industries (RIL IN)</a> is the key underweight, whilst <a href="https://www.smartkarma.com/entities/bajaj-finance-ltd" target="_blank" data-smartkarma-citation="entities:8950:1" rel="noopener">Bajaj Finance Ltd (BAF IN)</a><a href="https://www.smartkarma.com/entities/bharti-airtel-ltd" target="_blank" data-smartkarma-citation="entities:953:1" rel="noopener">Bharti Airtel (BHARTI IN)</a> and <a href="https://www.smartkarma.com/entities/larsen-toubro-ltd" target="_blank" data-smartkarma-citation="entities:2499:1" rel="noopener">Larsen &amp; Toubro </a>have been avoided by EM Value managers altogether.</li>
</ul>


India moves to largest underweight country holding among EM Value managers.  Current underweight the highest on record.
Among Value managers, India saw net fund outflows of $322m, the underweight increase by -1.92% and a further 7.7% of managers move to underweight over the last 6-months.

Reliance Industries (RIL IN) is the key underweight, whilst Bajaj Finance Ltd (BAF IN)Bharti Airtel (BHARTI IN) and Larsen &amp; Toubro have been avoided by EM Value managers altogether.


Value Funds Move to Record Underweight in India

India

Bajaj Finance Limited is a financial services company that operates branches in India, which provide an assortment of financial services.

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Bajaj Finance Ltd (BAF IN)

Bajaj Finance: Gearing Up To Become India's Dominant Fintech

BAF is at an inflection point led by its digital transformation. Recent volatility in its stock offers a good opportunity to accumulate.

Ankit Agrawal, CFA

Bajaj Finance: Stellar Show, Beats Estimates, Improved Visibility

Bajaj Finance is a dominant player in the consumer finance space while it has also made a foray into various lending segments wherein housing has...

ICICI Securities Limited

Bajaj Finance: Strong Quarter; Stretched Valuations

Bajaj Finance (BAF) Q3FY22 performance was robust, led by higher AUM growth of 9% QoQ (partly on account of festive demand) and PAT growth of 44% QoQ

Axis Direct

Strong beat driven by all-round healthy business momentum

While NII rose 41% YoY to INR47.3b (6% beat), due to higher interest income from IPO financing and lower negative carry, it was slightly mitigated...

Motilal Oswal

Value Funds Move to Record Underweight in India

India moves to the largest underweight country holding among EM Value managers. Current underweight the highest on record.

Steven Holden

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