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

Ankit Agrawal, CFA

I possess investment research experience across asset classes and geographies, acquired at Investcorp (New York) and Howe & Rusling (Rochester). At Investcorp, an alternative asset manager, I was part of an investment team managing >$1bn in discretionary client assets. I was also a member of investment recommendation, monitoring, cross-asset strategy and macro outlook committees that met periodically for investment decisions and top-down views. At Howe & Rusling, a long-only asset manager, I helped cover US large-cap equity investments across sectors for growth and income focused portfolios as well as assisted in managing a US small-cap growth focused equity portfolio. I possess an MBA in finance and corporate accounting from University of Rochester in US, a CFA Charter, and an Engineering degree from Indian Institute of Technology Bombay in India.  

My current focus is L/S equity fundamental research across market cap and sectors with an eye on corporate governance and forensic accounting. I am currently based in India and my current coverage universe is biased towards India.

-------------
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.

Research Analyst Contact Details -
Address: A-602, Titanium Business Park, Makarba, Ahmedabad - 380051 |
Email: services@yellowstoneequity.com |
Mobile: +91-7575817289

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

Equity L/S Analyst | Forensic Accounting | India

India - Companies Start to Amend FPI Limits Down From The Sectoral Cap

Increase in FPI Limits & Passive Inflows - The Ball Is Now in MSCI's Court

FTSE Moves on India Foreign Ownership Limits

Indian NBFCs - Equity Opportunities: Pessimism Bottoming Out, Time to Accumulate

Equity Bottom-Up

Bajaj Finance (BAF) reported its Q3FY20 results. Please note some key insights from management interactions post Q3FY20 earnings:
<ul>
<li>
Strong operational results despite consumer demand slowdown and one-off provisions. YoY AUM growth was strong at 35% and PBT grew 33%; PAT growth at 52% exceeded PBT growth led by one-time corporate tax cut benefits</li>
<li>
Overall, asset quality was decent with gross NPA (1.6%) remaining flat QoQ and net NPA increasing marginally QoQ by 5bps at 0.7%. However, credit costs were slightly elevated for Q3FY20 at 0.61% (non-annualized). Part of this is attributable to one-off provisions related to a broker account, Karvy, that went into default. Even ex of one-off provisions, credit costs for Q3FY20 were higher at 0.55% vs 0.45% in Q3FY19. Provision Coverage Ratio (PCR) though remains healthy at 57%.</li>
<li>While the 35% AUM growth was stellar, note that this has slowed down relative to 41% and 38% in the prior couple of quarters. However, in light of the consumption slowdown, the growth numbers are quite strong and we expect the growth trajectory to remain healthy as the consumption environment normalizes.</li>
<li>
Despite higher credit costs and decelerating growth pace, the return ratios have remained on an uptrend led by improved operational efficiencies and benefits from tax cuts. C to I (Cost to Income ratio) declined to 33.9% vs 34.9% YoY. Sequentially ROA has improved to 4.78% from 4.71%. ROE fell to 23.78% from 28.00% QoQ, due to excess liquidity from the capital raise of 8,500cr during the quarter. As this capital is deployed, ROE should normalize. </li>
</ul>

Bajaj Finance (BAF) reported its Q3FY20 results. Please note some key insights from management interactions post Q3FY20 earnings:


Strong operational results despite consumer demand slowdown and one-off provisions. YoY AUM growth was strong at 35% and PBT grew 33%; PAT growth at 52% exceeded PBT growth led by one-time corporate tax cut benefits

Overall, asset quality was decent with gross NPA (1.6%) remaining flat QoQ and net NPA increasing marginally QoQ by 5bps at 0.7%. However, credit costs were slightly elevated for Q3FY20 at 0.61% (non-annualized). Part of this is attributable to one-off provisions related to a broker account, Karvy, that went into default. Even ex of one-off provisions, credit costs for Q3FY20 were higher at 0.55% vs 0.45% in Q3FY19. Provision Coverage Ratio (PCR) though remains healthy at 57%.
While the 35% AUM growth was stellar, note that this has slowed down relative to 41% and 38% in the prior couple of quarters. However, in light of the consumption slowdown, the growth numbers are quite strong and we expect the growth trajectory to remain healthy as the consumption environment normalizes.

Despite higher credit costs and decelerating growth pace, the return ratios have remained on an uptrend led by improved operational efficiencies and benefits from tax cuts. C to I (Cost to Income ratio) declined to 33.9% vs 34.9% YoY. Sequentially ROA has improved to 4.78% from 4.71%. ROE fell to 23.78% from 28.00% QoQ, due to excess liquidity from the capital raise of 8,500cr during the quarter. As this capital is deployed, ROE should normalize. 


Bajaj Finance: The Stellar Growth Streak Continues!

Bajaj Finance Ltd

Bajaj Finance: The Stellar Growth Streak Continues!