Detailed Narrative
Consolidated Performance and Accounting Basis
Bajaj Finserv Limited reported a strong Q1 FY27, with consolidated total income growing 19% to INR 42,037 crore and consolidated profit after tax increasing 18% to INR 6,297 crore. The company prepares its financials in compliance with Ind AS, while insurance companies currently report on Indian GAAP, with Ind AS financials prepared solely for consolidation. Both insurance companies are set to transition to Ind AS from April 1, 2027, following IRDAI prescriptions.
Bajaj General Insurance: Navigating a Soft Market
Bajaj General Insurance's Gross Written Premium (GWP) grew 11.3% to INR 5,789 crore, in line with industry growth. However, underwriting loss increased to INR 130 crore from INR 116 crore last year, leading to an elevated combined ratio of 104.7%. Profit after tax declined to INR 478 crore from INR 660 crore, primarily due to lower capital gains. Management emphasized their disciplined focus on balanced growth and outperformance in a soft market, tactically reducing exposure in segments like motor due to pricing pressures.
Bajaj Life Insurance: Strong Growth in Premiums and Margins
Bajaj Life Insurance demonstrated robust growth, with GWP up 35% and retail weighted received premium growing 17.5% to INR 1,474 crore. Retail protection contributed 12% to the overall retail business, growing 60% YoY, while group protection business grew 95%. Value of New Business (VNB) surged 87% to INR 271 crore, and the New Business Margin expanded by 4.8% to 15.9%. Despite this, PAT de-grew to INR 51 crore from INR 171 crore, mainly due to lower capital gains and GST impact. AUM grew almost 10% to INR 1,43,744 crore, and solvency remained strong at 285%.
Lending Businesses: Robust AUM and Profit Growth
Bajaj Finance Limited reported a 20% growth in new loans booked to 1.61 crore and a 24% increase in AUM to INR 5,46,944 crore. Net total income grew 22% to INR 15,224 crore, and PAT rose 27.6% to INR 6,081 crore. Asset quality remained strong with GNPA at 0.96% and NNPA at 0.39%. Bajaj Housing Finance also delivered a strong quarter, with AUM growing 24% and PAT up 23% to INR 715 crore, driven by higher fee income and lower credit costs. Both entities maintain strong capital adequacy ratios.
Emerging Businesses: Strategic Investments and Path to Profitability
Bajaj Finserv Health executed 6 million healthcare transactions, though revenue saw a small degrowth due to restructuring. Bajaj Markets returned to a growth trajectory, with operating revenue up 32% to INR 107 crore. Bajaj Asset Management Company's AUM grew 26% YoY to INR 31,444 crore, with strong growth in SIP book and folios. Management provided clear timelines for profitability: Bajaj Finserv Direct aims for quarterly breakeven by Q3/Q4 FY27 and full-year breakeven by FY28, while Bajaj Finserv Health targets quarterly breakeven by Q3/Q4 FY28 and full-year by FY29. Bajaj AMC targets INR 1 lakh crore AUM in the next three years.
Reinsurance Company and Ind AS Transition
The Board approved setting up a reinsurance company, seen as a natural progression for insurance capabilities, with regulatory approvals pending. This new venture will require capital, especially for future international market entry. The transition to Ind AS for insurance companies, effective April 1, 2027, will impact accounting for acquisition costs and long-term liabilities. Management is working with regulators for clarifications on these implications, particularly regarding the treatment of onerous contracts.