During Q1FY14, Bajaj Finance's net profit jumps to Rs. 2113.60 million from Rs. 1757.40 million over the corresponding quarter last year, registered a growth of 20.27% y-o-y. Investors are recommended to buy the stock for a price target of Rs.2385.00.

1. CMP 2188.00
Target Price 2385.00
ISIN: INE296A01016
JULY 16th
2014
BAJAJ FINANCE LTD
Result Update (PARENT BASIS): Q1 FY15
BUYBUYBUYBUY
Index Details
Stock Data
Sector Financial Services
BSE Code 500034
Face Value 10.00
52wk. High / Low (Rs.) 2370.00/965.50
Volume (2wk. Avg) 3672
Market Cap (Rs. in mn.) 109706.32
Annual Estimated Results (A*: Actual / E*: Estimated)
YEARS FY14A FY15E FY16E
Net Sales 40314.20 49989.61 58987.74
EBITDA 26935.90 33504.14 39698.02
Net Profit 7190.10 8416.40 9702.63
EPS 143.40 167.86 193.51
P/E 15.26 13.03 11.31
Shareholding Pattern (%)
1 Year Comparative Graph
BAJAJ FINANCE LTD BSE SENSEX
SYNOPSIS
Bajaj Finance Limited is one of the most diversified
NBFCs in the market catering to more than 6 million
customers across the country.
Net sales of the company ramps up by 33.96% to Rs.
12436.10 million against Rs. 9283.20 million in
previous year period.
Net profit Jumps to Rs. 2113.60 million from Rs.
1757.40 million over the corresponding quarter last
year, registered a growth of 20.27% y-o-y.
Operating profit rose by 37.50% to Rs. 8280.10
million in Q1 FY15 as against Rs. 6022.00 million in
Q1 FY14.
The company has acquired 1252294 Customers
during Q1 FY15 and increased by 29% from 969447
Customers in Q1 FY14.
Business loans business continued to grow very
well during the quarter, with strong credit
performance. It Disbursed Rs.6850.00 million (YOY
growth of 70%) driven by strong up-sell to existing
A & A+ customers.
Assets under Management during Q1 FY15 up by
40% to Rs. 269430.00 million from Rs. 192290.00
million in Q1 FY14.
Rural Lending business is tracking ahead of plan. It
disbursed Rs. 500.00 million during the quarter.
The business also launched 14 new branches & 52
spokes in central Maharashtra & Gujarat.
Lifestyle financing business witnessed robust 216%
growth with disbursement of 56K loans in Q1 FY15.
Net Sales and PAT of the company are expected to
grow at a CAGR of 24% and 18% over 2013 to
2016E respectively.
PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND
Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)
Bajaj Finance Ltd. 2188.00 109706.32 143.40 15.26 2.73 160.00
Shriram Transport Finance Corporation 922.45 209288.00 55.72 16.56 2.53 70.00
Mahindra & Mahindra Financial Services 258.85 147224.80 15.60 16.59 2.89 190.00
Reliance Capital Ltd 593.10 145997.50 16.62 35.69 1.27 85.00

2. Recommendation & Analysis - ‘BUY’
During the quarter ending 30th June, 2014, Bajaj Finance Ltd reported a total income of Rs. 12459.60 million
against Rs. 9324.30 million in previous year period, which represents growth of 33.63%. The company earned
profit after tax of Rs. 2113.60 million, representing growth of 20.27% y-o-y. The company acquired 1252294
Customers during Q1 FY15 and increased to 29% from 969447 Customers in Q1 FY14. During Q1 FY15,
Consumer durable finance business continued its solid run and disbursing close a million customers (#987K) at a
YoY growth of 34%. This was the ever highest number disbursed by this business in a single quarter. Digital
product, Geo expansion and higher penetration of Air Conditioner sales has helped consumer finance growth
trajectory in Q1.
As at June, 30th 2014, the company has Rs.269430.00 million of Assets under management with a net NPA of
0.27% and a capital adequacy of 18%. For the 1st quarter of FY15, the Company’s Gross NPA and Net NPA stood
at 1.13% and 0.27% respectively. Salaried personal loans business continued to grow well with healthy credit
performance. Salaried loan business disbursed Rs. 2980.00 million YoY growths of 51% with 14% business
sourced from digital channel. The Company continues to be well capitalized to support its growth trajectory.
Bajaj Finance acquired 1252294 Customers and increased to 29% in Q1 FY15.Capital adequacy ratio
including Tier-II capital stood at 18%. The Company continues to be well capitalized to support its
growth trajectory. This will improve customer experience substantially and thus help grow business in FY15.
Over FY2013-16E, we expect the company to post a CAGR of 24% and 18% in its top-line and bottom-line
respectively. Hence, we recommend ‘BUY’ for ‘BAJAJ FINANCE LTD’ with a target price of Rs. 2385.00 for
medium to long term investment.
QUARTERLY HIGHLIGHTS (PARENT BASIS)
Results updates- Q1 FY15,
Rs. In million JUN-14 JUN-13 % Change
Net Sales 12436.10 9283.20 33.96
PAT 2113.60 1757.40 20.27
EPS 42.15 35.30 19.41
EBITDA 8280.10 6022.00 37.50
The company’s net profit jumps to Rs. 2113.60 million against Rs. 1757.40 million in the corresponding quarter
ending of previous year, an increase of 20.27%. Revenue for the quarter rose by 33.96% to Rs. 12436.10 million
from Rs. 9283.20 million, when compared with the same period of Last year. Reported earnings per share of the
company stood at Rs. 42.15 a share during the quarter, registering 35.30% increase over previous year period.
Profit before interest, depreciation and tax is Rs. 8280.10 million as against Rs. 6022.00 million in the
corresponding period of the previous year.

3. Break up of Expenditure
Particulars
Rs. Millions
Q1 FY15 Q1 FY14
Employee Benefit Expenses 1078.10 779.20
Depreciation & Amortization
Expense
77.70 50.10
Loan Losses & Provisions 829.20 638.80
Marketing & Other
Commissions
695.90 574.90
Recovery Costs 468.50 358.40
Other Expenses 1107.80 939.90
Latest Updates
• The company in Q1 FY15 has delivered a pre tax profit of Rs. 3210.00 million and a post tax profit of Rs.
2110.00 million at a ROA of 0.9% and ROE of 5.1%.
• During Q1 FY15, the company acquired 1252294 Customers and increased to 29% from 969447 Customers
in Q1 FY14.
• Return on Assets and Return on Equity for Q1 FY15 were 0.9% and 5.1% respectively.
• Gross NPA and Net NPA for Q1 FY15 stood at 1.13% and 0.27% respectively. The provisioning coverage
ratio stood at 76% as of 30 June 2014. The Company continues to provide for loan losses in excess of RBI
requirements.
• Capital adequacy ratio including Tier-II capital stood at 18%. The Company continues to be well capitalized
to support its growth trajectory.
• Two Wheeler financing penetration of Bajaj Auto domestic Two Wheeler sales was at 28%. Currently
operating in 16 states covering 138 key dealers of Bajaj Auto Ltd.
• Lifestyle financing business witnessed robust 216% growth with disbursement of 56K loans in Q1 FY15.
• During the quarter, the company garnered Rs. 1370.00 million of Fixed Deposit, with this the total deposit
book reached to Rs. 3450.00 million. Average deposit size is 2.78 lacs and tenor is 26 months.
• Current borrowing mix of Bajaj Finance Ltd between banks, money markets and retail deposits is 58:42:02.
The company revamped its treasury practices and has strengthened its ALM & risk management framework.

4. COMPANY PROFILE
Bajaj Finance Limited is a 26 year old most diversified non-bank in India with a demonstrated track record of
profitability. Apart from being the largest financier of consumer durables in India the company is also one of the
most profitable firms in this category. Bajaj Finance is focused on consumer, SME and commercial lines of
business which are spread across nine product lines.
Bajaj Finance is a consumer focused company with emphasis on profitable growth and operational efficiency to
deliver best results to all its stakeholders. Bajaj Finance Limited is a subsidiary company of Bajaj Finserv Limited
which is the holding company for the financial services businesses of the Bajaj Group.
The Company has been ranked as the 3rd Best Financial Services company to work in India for a second year in a
row by Places to -GPTW. The Company has moved up significantly from being the 43rd Best Company to Work
for in India to the 23rd Best Company to Work for in India in 2014.
Business Area
At present Bajaj Finance focus is on three broad categories: (i) Consumer Finance, (ii) SME Finance and (iii)
Commercial Lending. (iv) Rural Lending, and (v) Wealth Management and fee based product distribution.The
Company’s product suite which falls under these categories is given below.
(i) Consumer Finance
• 2 Wheeler and 3 Wheeler Finance
• Consumer Durables
• Lifestyle products
• Personal Loan Cross Sell
• Salaried Personal Loans
• Co-branded Credit Card
• Home Loans
(ii) SME Finance
• Loan Against Property
• Home Loans
• Working Capital Loans
• Loan Against Securities
(iii) Commercial Lending
• Construction Equipment Finance
• Infrastructure Finance
• Auto Component Manufacturer Financing
(iv) Rural Lending
• Gold Loans
• Refinance Loans
(v) Wealth Management and Fee based Products
• Life Insurance Distribution
• General Insurance Distribution
• Credit Rating Distribution

5. FINANCIAL HIGHLIGHT (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions)
Balance Sheet as at March 31st, 2013 -2016E
BAJAJ FINANCE LIMITED FY-13A FY-14A FY-15E FY-16E
EQUITY AND LIABILITES
Shareholder's Funds
Share Capital 497.80 497.50 497.50 497.50
Reserves and Surplus 33172.60 39411.10 48117.60 57820.23
a) Total Net worth 33670.40 39908.60 48615.10 58317.73
Non Current Liabilities
Long term borrowing 75030.80 104777.60 134115.33 166303.01
Other Long term liabilities 419.60 573.50 757.02 946.28
Long term Provisions 646.10 1104.70 1579.72 2116.83
b) Total Non-Current liabilities 76096.50 106455.80 136452.07 169366.11
Current Liabilities
Short term borrowings 20801.40 54727.80 73882.53 96047.29
Trade payables 1689.50 1959.20 2243.28 2534.91
Other Current Liabilities 45025.10 41868.50 43292.03 44157.87
Short term Provisions 928.80 1260.10 1694.83 2203.28
c) Total Current Liabilities 68444.80 99815.60 121112.68 144943.35
Total Liabilities (a + b + c) 178211.70 246180.00 306179.84 372627.19
ASSETS
Non-Current Assets
Fixed Assets 1762.10 2198.70 2715.39 3312.78
Non-current investments 52.60 0.00 0.00 0.00
Deferred Tax assets 903.70 1391.60 1850.83 2424.58
Receivables under financing activity 95481.90 138524.20 173709.35 211193.30
Long-term loans and advances 862.50 1124.40 1371.77 1646.12
d) Total Non-Current Assets 99062.80 143238.90 179647.34 218576.78
Current Assets
Current Investment 0.00 282.10 346.98 423.32
Receivables under financing activity 71954.50 91185.30 111325.13 134703.41
Cash and Bank Balances 4164.00 7768.10 10486.94 13842.75
Short-terms loans & advances 2348.40 2918.40 3472.90 4063.29
Other current assets 682.00 787.20 900.56 1017.63
e) Total Current Assets 79148.90 102941.10 126532.50 154050.40
Total Assets (d + e) 178211.70 246180.00 306179.84 372627.19

6. Annual Profit & Loss Statement for the period of 2013 to 2016E
Value(Rs.in.mn) FY13A FY14A FY15E FY16E
Description 12m 12m 12m 12m
Net Sales 30937.20 40314.20 49989.61 58987.74
Other Income 176.50 419.10 461.01 530.16
Total Income 31113.70 40733.30 50450.62 59517.90
Expenditure -10189.50 -13797.40 -16946.48 -19819.88
Operating Profit 20924.20 26935.90 33504.14 39698.02
Interest -12056.80 -15732.40 -20294.80 -24353.76
Gross profit 8867.40 11203.50 13209.34 15344.26
Depreciation -151.40 -291.90 -379.47 -485.72
Profit Before Tax 8716.00 10911.60 12829.87 14858.54
Tax -2802.90 -3721.50 -4413.48 -5155.91
Net Profit 5913.10 7190.10 8416.40 9702.63
Equity capital 497.80 501.40 501.40 501.40
Reserves 33172.60 39701.20 48117.60 57820.23
Face value 10.00 10.00 10.00 10.00
EPS 118.78 143.40 167.86 193.51
Quarterly Profit & Loss Statement for the period of 31Dec, 2013 to 30 SEP, 2014E
Value(Rs.in.mn) 31-Dec-13 31-Mar-14 30-Jun-14 30-Sep-14E
Description 3m 3m 3m 3m
Net sales 10703.20 10711.30 12436.10 12995.72
Other income 115.80 238.90 23.50 16.45
Total Income 10819.00 10950.20 12459.60 13012.17
Expenditure -3712.30 -3540.30 -4179.50 -4327.58
Operating profit 7106.70 7409.90 8280.10 8684.60
Interest -4096.70 -4500.50 -4996.40 -5496.04
Gross profit 3010.00 2909.40 3283.70 3188.56
Depreciation -61.50 -141.90 -77.70 -89.36
Profit Before Tax 2948.50 2767.50 3206.00 3099.20
Tax -1007.10 -946.60 -1092.40 -1059.93
Net Profit 1941.40 1820.90 2113.60 2039.28
Equity capital 497.80 501.40 501.40 501.40
Face value 10.00 10.00 10.00 10.00
EPS 39.00 36.32 42.15 40.67

7. Ratio Analysis
Particulars FY13A FY14A FY15E FY16E
EPS (Rs.) 118.78 143.40 167.86 193.51
EBITDA Margin (%) 67.63 66.81 67.02 67.30
PBT Margin (%) 28.17 27.07 25.67 25.19
PAT Margin (%) 19.11 17.84 16.84 16.45
P/E Ratio (x) 18.42 15.26 13.03 11.31
ROE (%) 17.56 17.88 17.31 16.64
ROCE (%) 16.27 13.63 13.20 12.53
Debt Equity Ratio 2.85 3.97 4.28 4.50
EV/EBITDA (x) 9.59 9.71 9.17 9.02
Book Value (Rs.) 676.38 801.81 969.66 1163.18
P/BV 3.23 2.73 2.26 1.88
Charts

8. OUTLOOK AND CONCLUSION
At the current market price of Rs.2188.00, the stock P/E ratio is at 13.03 x FY15E and 11.31 x FY16E
respectively.
Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs.167.86 and
Rs.193.51 respectively.
Net Sales and PAT of the company are expected to grow at a CAGR of 24% and 18% over 2013 to 2016E
respectively.
On the basis of EV/EBITDA, the stock trades at 4.28 x for FY15E and 4.50 x for FY16E.
Price to Book Value of the stock is expected to be at 2.26 x and 1.88 x respectively for FY15E and FY16E.
We recommend ‘BUY’ in this particular scrip with a target price of Rs. 2385.00 for Medium to Long term
investment.
INDUSTRY OVERVIEW
Financial services sector has been a great stimulus to the Indian economy accounting for 56.9 per cent of the
gross domestic product (GDP), wherein the financial services segment has been a major contributor. The growth
of the financial sector in India at present is nearly 8.5 per cent per year. Dominated by commercial banks which
have over 60 per cent share of the total assets, India’s financial sector comprises commercial banks, insurance
firms, non-banking institutions, mutual funds, cooperatives and pension funds, among other financial entities.
The Government of India has helped in this development, introducing reforms to liberalise, regulate and enhance
the country’s financial services. Today, India is recognised as one of the world’s most vibrant capital markets.
Notwithstanding challenges, the sector’s future seems to be in good hands.
Mutual Funds Industry in India
More than 80 per cent of Indian investors are satisfied with their mutual fund schemes, according to a survey by
Financial Intermediaries Association of India (FIAI). The survey also stated that 60 per cent of the mutual fund
investors were satisfied with services of advisers and distributors of investment schemes.
Private Equity, Mergers & Acquisitions in India
Mergers and acquisitions (M&A) activity between India and the European Union is poised to grow in FY 2014–
15, according to Mumbai-based investment bank Avendus Capital. The IT and business process outsourcing
(BPO) industry are expected to lead the way in scouting for acquisitions in Europe.

9. Private equity (PE) firms invested US$ 2.27 billion in the period of January–March 2014, a 93 per cent increase
from the investments (US$ 1.18 million) made during the same quarter of 2013. There were five investments of
US$ 100 million or more in the quarter against one in the corresponding period of 2013.
Foreign Institutional Investors (FIIs) in India
• Non-resident Indians (NRIs) and FIIs will now be allowed to invest in the insurance sector, within the overall
26 per cent cap on foreign direct investment (FDI). The department of industrial policy and promotion
(DIPP) in a press note confirmed that apart from insurance companies, the relaxation would also cover
insurance brokers, third-party administrators (TPAs), surveyors and loss assessors.
• FIIs were gross buyers of debt securities valued at Rs 302660.00 million (US$ 5.07 billion) and sellers of
bonds worth Rs 114500.00 million (US$ 1.91 billion) in the period January 1–24, 2014, which resulted in a
net inflow of Rs 188160.00 million (US$ 3.15 billion), according to the SEBI. Also, during the same period,
FIIs invested Rs 34730.00 million (US$ 582.21 million) into the equity market, making their total investment
in debt and stocks to be around Rs 222890.00 million (US$ 3.73 billion).
• Foreign investors invested about Rs 3713420.00 million (US$ 62.25 billion) into India’s stock market in the
four years ended December 2013. This figure surpasses the investments in the boom years of 2005–08.
• Investments by FIIs in the Indian stock market crossed the Rs 1 trillion (US$ 16.77 billion) mark in December
2013 – the third time this has been achieved since FIIs’ entry into the capital market in 1992–93.
Financial Services in India: Recent Developments
American Express Co. has bought a minority stake in Bengaluru-based payment device maker Ezetap Mobile
Solutions. In February 2014, Ezetap had received venture funding of Rs 498.00 million (US$ 8.34 million) from a
group of investors headed by venture fund Helion Venture Partners.
Non-banking financial company (NBFC) Manappuram Finance Ltd (MFL) has entered into an agreement to
acquire Milestone Home Finance Company from Jaypee Hotels. The transaction is MFL's strategy to broaden its
business by venturing into the profitable lucrative housing finance space, as per a press statement released by
the company.
Financial Services: Government Initiatives
Given the growth of the Indian film industry, Third Eye Cinema Fund (TCEF), a SEBI-registered alternative
investment fund, is set to enter the Indian market. Those not connected with the Hindi film segment will now
soon be able to reap the benefits of the sector’s growth. TCEF aims to generate about 25 per cent returns.

10. In an effort to give impetus to bilateral ties, India and South Korea have decided to strengthen cooperation in
many key sectors, including trade, investment and defence. Nine pacts in different fields, including one in cyber
space cooperation, were inked following talks between the Indian prime minister and the South Korean
president.
Disclaimer:
This document prepared by our research analysts does not constitute an offer or solicitation for the purchase r sale
of any financial instrument or as an official confirmation of any transaction. The information contained herein is
from publicly available data or other sources believed to be reliable but do not represent that it is accurate or
complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s affiliates shall
not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the
information contained in this report. This document is provide for assistance only and is not intended to be and must
not alone be taken as the basis for an investment decision.

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