Bajaj Finance, DLF Q3 Results Reviews: HDFC Securities

HDFC Securities Institutional Equities

Bajaj Finance Ltd. - Correction offers an attractive entry

Bajaj Finance delivered a strong operating performance, with steady net interest margins in a rising interest rate and strong AUM growth (up 27% YoY) environment. The healthy AUM growth comes despite elevated competitive intensity in select segments such as home loans, business-to-business finance, etc. Asset quality improved further, with gross stage-II/GS-III at 1.3%/1.1% (FY22: 2%/1.6%) and normalised credit costs. The management articulated its 2022-27 long range strategy, outlining ~25-30% assets under management/profit after tax compound annual growth rate on the back of robust customer acquisition, further emphasis on cross-selling and the addition of new loan products.

DLF Ltd. - New launches to drive rerating

During Q3 FY23, DLF booked its second-highest quarterly presales of Rs 25.1 billion (up 24%/up 22% YoY/QoQ), beating our estimate of Rs 21 billion; with this, the nine months-FY23 presales stand at Rs 66 billion. With Rs 80 billion of new launches planned for Q4 FY23, we expect DLF to comfortably surpass its FY23 presales guidance of Rs 80 billion. New products contributed 89% to the total presales with the luxury project. The Grove (in Gurugram) clocking Rs 15.7 billion of sales booking. Hyderabad special economic zone project was pushed back on account of delay in DESH bill causing DLF to fully repay Rs 5.8 billion of capex advance to DLF Cyber City Developers Ltd. This resulted in net debt reducing marginally to Rs 20.9 billion (versus Rs 21.4 billion in Q2 FY23).

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