Bajaj Finserv Ltd Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Supratim Datta - AMBIT - Analyst : Now my first question is on the BAGIC business. Now I just wanted to understand what are you seeing in motor TP that you have preferred to allow this category to decline during 1Q. Is it higher commission? Is it higher loss ratio? What is exactly the concern here that you are taking? That's one. Two, is more of an accounting question of what I see is that the NEP this quarter has been higher than the NWP, just wanted to understand what is driving that, if you could explain that. I have 2 more questions for the BALIC and Bajaj Health business, but I'll go after this.

Question: Supratim Datta - AMBIT - Analyst : Got it. But if I do not take into account this one-off impact, then you will not have an underwriting profit as well, right? Because you would have gotten commission inwards due to the seeding, which would not just that.

Question: Supratim Datta - AMBIT - Analyst : Understood. That's very clear. Now coming to BALIC, now on the margin that, last year, first quarter, you had indicated that the margin was lower due to launch of a low-margin product and the growth being slower. Now this quarter, the growth has been strong at 18%. While there is a product REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 25, 2024 / 8:30AM, BJFS.NS - Q1 2025 Bajaj Finserv Ltd Earnings Call mix shift. However, despite that this -- the margin appears to be very soft. So just wanted to understand why has this been the case. And is there something beyond the product mix shift that is there?

Question: Supratim Datta - AMBIT - Analyst : One last question on the Bajaj Health business. So the Bajaj Health business, you now have Vidal in that business. Just wanted to understand what kind of deal do you think is required in this business to turn profitable? Do you have a certain target or is there a business plan that at which this business turns profitable? And what would help you to reach that scale?

Question: Supratim Datta - AMBIT - Analyst : Understood. Thank you very much. Thank you.

Question: Nischint Chawathe - Kotak Institutional Equities - Analyst : First, I think on the life side, we're trying to sort of translate the margins and looking at a reasonably high increase in unit-linked and Par business, taking away from non-Par. Just curious how the margin stacks up, given the fact that there was a pretty small compression in margins on a

Question: Nischint Chawathe - Kotak Institutional Equities - Analyst : So, just a related question. On the agency side, growth this time was around 15%. I guess we have been stepping up a little bit more now. So is this kind of a mid-teens agency growth that we're looking at? Tarun Chugh - Bajaj Allianz Life Insurance Company Ltd - Managing Director, Chief Executive Officer of Bajaj Allianz Life Insurance Company Ltd We don't make a projection on growth of channels and otherwise, don't talk about forward-looking statements. But having said that, yes, the CAGR on agency has been at 19%. Our focus is always to ensure that we, despite being now one of the largest agencies, look at the base effect, get into more cities. We run multiple agencies. We don't run one. So a lot of these will play out over a period of time. But I don't think I can make a statement on -- in terms of growth rates of all like this.

Question: Nischint Chawathe - Kotak Institutional Equities - Analyst : And Axis Bank seems to have stepped up this quarter. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 25, 2024 / 8:30AM, BJFS.NS - Q1 2025 Bajaj Finserv Ltd Earnings Call Tarun Chugh - Bajaj Allianz Life Insurance Company Ltd - Managing Director, Chief Executive Officer of Bajaj Allianz Life Insurance Company Ltd Yeah. So is that a question or statement?

Question: Nischint Chawathe - Kotak Institutional Equities - Analyst : One is on health insurance. If you could kind of help us understand the trend in health loss ratios. Is it a mix-change? Or is it something that we are able to see some -- whether there's a deterioration or improvement in the retail loss ratios? And just finally, on Bajaj markets, we're looking at organic visits and transacting customers sort of slowing down. So how should one look at this and whether we'll be doing further investments on this? So those are the 2 final questions.

Question: Nischint Chawathe - Kotak Institutional Equities - Analyst : Yeah. Sorry, on the health side, if you could break the loss ratios between retail and growth and the change in loss ratio this quarter? So basically, on the retail side, have we seen an improvement or deterioration in the loss, which if possible, you could break it between retail and growth?

Question: Nischint Chawathe - Kotak Institutional Equities - Analyst : And Bajaj markets?

Question: Nischint Chawathe - Kotak Institutional Equities - Analyst : Thank you so much. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 25, 2024 / 8:30AM, BJFS.NS - Q1 2025 Bajaj Finserv Ltd Earnings Call

Question: Nischint Chawathe - Kotak Institutional Equities - Analyst : Yeah. Thanks and all the best.

Question: Sanket Godha - Avendus Spark - Analyst : Yeah. Thank you for the opportunity. So my question is largely related to motor on damaging BAGIC. Our growth on OD is strong around 22 percentage. By any challenge, this growth includes Hero, I say OEM addition? Or we expect that Hero addition will come in subsequent quarters in -- from some of that OEM this thing? And second thing, with respect to OD was to understand the claims because last year, we ended at 63.6. Today, it is at 69.4, It's a meaningful deterioration around 600 basis points. So just wanted to understand any specific reason why this motor OD loss ratios have marginally -- or have increased compared to last April. That is the question on BAGIC I have, then I'll ask on BALIC.

Question: Sanket Godha - Avendus Spark - Analyst : Got it. Perfect. And Hero, you might have assessed it internally. How big is the potential? I mean if it start firing from second quarter, how much extra layer it can add to the growth?

Question: Sanket Godha - Avendus Spark - Analyst : Okay. Thanks for the answer. On BALIC, my question is -- I mean if you can break up that growth of Bank of 27 percentage into Axis and non-Axis. I just wanted to understand where the growth has come from compared to the large bank channel we have. And the next one was, again, with respect to growth, if something a little different have we done in direct channel, which led to such a strong growth? Anything which you want to highlight, the 75% growth, how is it sustainable for the full year because that's probably one of the way to recruit margins if surrender norms impact, as you rightly highlighted that the direct channel will be a little mitigant on product mix to protect the margin. Sir, if you can give a little more color on that part will be very useful. Tarun Chugh - Bajaj Allianz Life Insurance Company Ltd - Managing Director, Chief Executive Officer of Bajaj Allianz Life Insurance Company Ltd Okay. See, it's always not -- we can't be so transparent, we tell you exact percentages of all our banks. And honestly, we keep changing. But I mean, broadly speaking, Axis is, of course, our largest contributor. And I mean, a little less than all our other banks, bank business comes from -- even half of that comes from Axis Bank. But we do have partners in aggregator space in the broking spaces, et cetera, which we're not adding up to that. So overall, this share is -- on an overall basis, Axis will be under 23%, which is what we've always been saying. And Banca would be Banca broking, everything would be close to about 50-ish -- 45% to 50%. It varies depends on the this quarter was 45%. Now on the Direct business, see, Direct is something we've been working on for quite some time, and we've been actually quite positive in making a lot of investments, I think a lot many verticals. We started a defense channel. These are customers who are existing with us. And we have to get more and more efficient about servicing them and upselling them new products. And as our product mining has been going on, we've been able to decipher where there are more possibilities of developing efficiencies in this channel. We do expect this channel to remain relatively faster growing versus the rest of the other businesses, namely agency and institutional business. But yeah, these are exceptional growth rates we've been able to get this quarter. I don't think that kind of level will be sustainability for.

Question: Sanket Godha - Avendus Spark - Analyst : And lastly, if I can squeeze one. If -- I'm trying my luck if you want to answer, you can answer, but... Tarun Chugh - Bajaj Allianz Life Insurance Company Ltd - Managing Director, Chief Executive Officer of Bajaj Allianz Life Insurance Company Ltd So you thought say you're lucky anyway. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 25, 2024 / 8:30AM, BJFS.NS - Q1 2025 Bajaj Finserv Ltd Earnings Call

Question: Sanket Godha - Avendus Spark - Analyst : Got it. Thanks for the answer.

Question: Madhukar Ladha - Nuvama Wealth Management - Analyst : Hi. Good afternoon. Most of my questions have been answered. Just a couple of ones which are left. One on the Vidal acquisition, now that you've acquired Vidal, are you seeing other insurance companies associated with Vidal withdrawing from -- withdrawing business from there because that was one of the fears that the market and I also had. Second, you've done a pretty large government health transaction last year, the Vidal government transaction and you would be competing about a year. So maybe you could talk a little bit about your experience and your learnings? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 25, 2024 / 8:30AM, BJFS.NS - Q1 2025 Bajaj Finserv Ltd Earnings Call And how would you sort of see that business in terms of whether you would still like to continue or what sort of changes or anything else that you would like to add in terms of making that business more profitable. Yes, any comments and color around that would be helpful. These would be my 2 questions.

Question: Madhukar Ladha - Nuvama Wealth Management - Analyst : Got it. And the next one on the... REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 25, 2024 / 8:30AM, BJFS.NS - Q1 2025 Bajaj Finserv Ltd Earnings Call

Question: Madhukar Ladha - Nuvama Wealth Management - Analyst : Sure, sir. Any comments qualitatively on the loss ratios or what needs to be done.

Question: Madhukar Ladha - Nuvama Wealth Management - Analyst : Alright. All the best.