Bajaj Finserv Revenue segmentation, Cost analysis & Regression analysis

Project/Slides/Presentation Transcript

Topic: Bajaj Finserv Revenue segmentation, Cost analysis & Regression analysis

INTRODUCTION

Bajaj Finserv was formed in April 2007 as a result of its demerger from Bajaj Auto Limited to further the Group’s interests in financial services.

Bajaj Finserv Limited is the holding company for the businesses dealing with financial services of the Bajaj Group.

Three key financial sector are

REVENUE SEGMENTATION

REVENUE SEGMENTATION OF BAJAJ FINSERV (PRIMARY DETAILS)
		2014			2013			2012
S.No.	CATEGORY	AMOUNT (IN RS. CRORES)	PERCENTAGE OF REVENUE	GROWTH (YOY)	AMOUNT (IN RS. CRORES)	PERCENTAGE OF REVENUE	GROWTH (YOY)	AMOUNT (IN RS.CRORES)	PERCENTAGE OF REVENUE
1	REVENUE FROM OPERATION
A.	WINDFARM ACTIVITY	60.44	1.00%	-0.45%	73.38	1.45%	-0.71%	84.37	2.16%
B.	INVESTMENT ACTIVITY
I.	INTEREST	4538.06	75.32%	6.02%	3515.59	69.30%	9.36%	2340.44	59.94%
II.	OTHER FINANCIAL SERVICES	309.51	5.14%	0.60%	230.41	4.54%	-2.88%	289.81	7.42%
2	OTHER INCOME	3.97	0.07%	0.02%	2.46	0.05%	0.01%	1.73	0.04%
3	OPERATING RESULT FROM GENERAL INSURANCE BUSINESS	473.91	7.86%	1.28%	333.86	6.58%	3.52%	119.3	3.06%
4	AMOUNT TRANSFERRED FROM THE POLICY HOLDERS ACCOUNT	639.1	10.61%	-7.47%	917.48	18.08%	-9.30%	1069.13	27.38%
	TOTAL REVENUE	6024.99	100.00%		5073.18	100.00%		3904.78	100.00%

ANALYSIS

Reasons for Decline in Growth –

Due to the sudden drop in the demand for renewable energy certificates(RECs) on the energy exchange during the year , there was a decline in wind farm activities.
Industry specific changes triggered in 2014 and set of regulations were issued on par and non par offering which led to the loss of several flagship product across the industry.
There was decline in all sector because of the significant decline in car and motor sales.
The various other reasons are:-
Political uncertainties.
Overhang of many corruption scandals.
Government ability to take decision went into deep freeze.
Danger of high inflation.
RBI responded swiftly by tightening monetary policy.

Reason for the Growth in Investment Activity –

Bajaj Finance Ltd. launched its fixed deposit programme as an anchor wealth management product in 2014.

COST COMPONENT STRUCTURE

COST STRUCTURE OF BAJAJ FINSERV
		2014			2013			2012
S.NO.	COST COMPONENTS	AMOUNT (IN RS. CRORES)	COST AS A % OF SALES	GROWTH (YOY)	AMOUNT (IN RS. CRORES)	COST AS A % OF SALES	GROWTH (YOY)	AMOUNT (IN RS. CRORES)	COST AS A % OF SALES
	EXPENSES
I.	CONTRIBUTION TO THE POLICY HOLDER’S FUND	6.94	0.12%	0.07%	2.35	0.05%	-0.02%	2.85	0.07%
II.	EMPLOYEE BENEFIT EXPENSE	440.73	7.32%	0.73%	334.28	6.59%	-0.19%	264.7	6.78%
III.	LOAN LOSSES AND PROVISIONS	257.81	4.28%	0.70%	181.75	3.58%	-0.38%	154.38	3.96%
IV.	FINANCE COST	1561.87	25.94%	2.20%	1203.58	23.74%	4.68%	744.1	19.06%
V.	DEPRECIATION AND AMORTISATION	30.88	0.51%	0.08%	21.69	0.43%	0.07%	14.12	0.36%
VI.	OTHER EXPENSE	825.15	13.70%	1.44%	621.42	12.26%	-0.51%	498.41	12.77%
	PROFIT BEFORE TAX	2897.64	48.13%	-5.22%	2705.65	53.35%	-3.65%	2224.49	57.00%
	SALES	6021.02	100.00%		5070.72	100.00%		3903.05	100.00%

ANALYSIS

2012 has been a very difficult year for the Indian economy. After clocking 8.6% GDP growth in 2011, the nation seem to be slumped, growth has fallen steadily to 6.5%.
Along with slowdown in growth, it was a selerotic pace at which decisions were taken in New Delhi.
High interest rates
Declining inflows of Foreign Direct and institutional investments
Widening current account deficit & weakening rupees.
Worsening investment climate and fears of rising inflation.

COST STRUCTURE OF L&T FINANCE

ANALYSIS

Reasons for Higher Profit as Compared to L& T Finance –

It issued 6.7 million policies in 2014 versus 6.3million in 2013
Companies strong underwriting and claim management skills led to ROE of 28%.
Technological innovation such as the Ezee TAB platform for policy issuance & claim settlement.
Emphasizing uniformly high quality customer service.
Company launched a new product “Kisan Mitra” for farmers where repayments of installment are synchronised to realisation from crops.

OPERATING LEVERAGES OF BAJAJ FINSERV

ANALYSIS

As the operating leverage of Bajaj Finserv is less than the operating leverage of L& T Finance, investment in L&T Finance would be more riksy as compared to Bajaj Finserv.
Inspite of economic uncertainities and slowdown in the economy the company has been able to maintain stable position (i.e. Revenue generation was not much affected).
Financial sector has less risk as compared to cement and FMCG companies.