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Equity Research Report on Bajaj Finserv Ltd

Authored by: Mohammad Reza Poya
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A General Overview of Bajaj Finserv Ltd

Bajaj Finserv Limited, a part of Bajaj Holdings & Investments Limited. And it is an Indian
financial service company. Bajaj Finserv was formed in 2007 as result of its demerger from Bajaj
Auto ltd as a separate entity and the process of demerge was completed in February 2008. Bajaj
Finserv ltd is primarily engaged in promoting financial services such as finance, insurance, wealth
management, etc. through its investments in subsidiaries and joint ventures. The Company is also
engaged in the business of generating power through wind turbines, a renewable source of energy.
Bajaj Finserv ltd is the holding company for various financial services businesses under the Bajaj
group such as Bajaj finance ltd, Bajaj Allianz general insurance company ltd and Bajaj Allianz life
insurance company ltd.

Shareholding pattern in percentage

Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun
2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020

Promoters 58.35 58.35 58.35 58.35 58.35 58.35 58.37 60.71 60.71 60.71 60.80 60.80

FIIs 8.22 7.89 7.82 7.47 7.37 7.85 8.30 8.90 8.46 8.70 8.62 7.98

DIIs 6.40 6.88 7.03 7.29 7.25 6.74 6.50 6.25 6.74 6.63 6.24 6.35

Public 27.03 26.88 26.80 26.89 27.01 27.04 26.81 24.11 23.96 23.84 24.15 24.68

Others 0.00 0.00 0.00 0.00 0.02 0.03 0.03 0.03 0.13 0.13 0.19 0.19

Management of Bajaj Finserv Ltd

Mr. SANJIV BAJAJ (managing director and chairman)

SANJIV BAJAJ born on Nov 2,1969. Mr. Bajaj has done
manufacturing system engineering from university of Warwick, UK.
And he has received his second degree of MBA from Harvard
Business School, USA. Since 20.2.2008, he is the Managing Director
& CEO of Bajaj Finserv Ltd. and recently in 2020 has also become
Chairman. He has been elected as Chairman of the Confederation of
Indian Industry (CII) Western Region for 2019-20. Since 15.10.2013,
he is the Vice Chairman of Bajaj Finance Ltd as well. according to
Business World, he was India's Most Valuable CEOs in 2015 & 2016.
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Board of Directors

S. SREENIVASAN RANJIT GUPTA V. RAJAGOPALAN

ANISH AMIN DEEPAK REDDY GANESH MOHAN

AJAY SATHE RAJEEV JAIN TAPAN SINGHEL

ATUL JAIN DEVANG MODY RAKESH BHATT

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SWOT Analysis of Bajaj Finserv Ltd

SWOT analysis stands for Strengths, Weaknesses, Opportunities and Threats Analysis.

Strengths

 Bajaj Finserv ltd has high skilled labor forces that allows it to the customers’ expectation and to
elevates its financial offerings in the market
 It has shown a strong and stable income, e.g. Profit after tax (PAT) for FY2020 grew by 32%
to H 5,264 crore even after absorbing the above provisions. And reasonable return on equity
 It provides a diversification of financial services, such as finance, insurance, wealth
management and many more
 Bajaj Finserv ltd has a rising net Cash Flow and Cash from Operating activities.
 Flagship company of Bajaj group
 Increasing focus on innovative services
 The Bajaj Finserv ltd company has many subsidiaries companies

Weaknesses

 Increasing the debts of the company over last 5 years

 Capital appreciation of the shows a decline curve in last 10 years that is not good sign for
investors
 FII and DII or institutions decreasing their shareholding

Opportunities

 Focus on existing customers

 The Bajaj Finserv ltd has increased investment on technology that has a positive long term
impact on the company from many aspects
 The company can expand its operations to other developed and developing countries as the
company has good balance sheet
 Raising on demand for financial services in India, due to raising on disposable income of the
Indian citizens and the has healthy income, so the company can increase its market share easily,
as India is expected to be the fourth largest private wealth market globally by 2028.
 The Bajaj Finserv ltd can offer cost effective financial services to the global customers, due to
cheaper skilled labor forces and other components of cost in India

Threats
 Competition from commercial banks and other non-banking organizations
 Rising wages inflation in India
 The market dynamics of international market is on continuous changes, the changes in any
market trend and customer behavior may result in failure of the joint venture, easing the
company great loss and also exit from the market
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 Cyber-attack always exists for banking and non-banking institutions, so Bajaj Finserv ltd is
not exceptional from this threat

Competitive Analysis

These two following companies are competitors of Bajaj Finserv ltd

Muthoot Finance Ltd

Muthoot Finance collectively operating under the brand name of The Muthoot Group, which has
diversified interests in the fields of Financial Services, Healthcare, Education, Plantations, Real
Estate, Foreign Exchange, Information Technology, Insurance Distribution, Hospitality etc. The
Company obtained permission from the Reserve Bank of India for carrying on the business of
Non-Banking Financial Institutions on 13-11-2001.

Shriram Transport Finance Company Ltd

Shriram Transport Finance Company Limited (STFC) is the flagship company of Shriram Group
a diversified group with interests in financial services viz. Commercial vehicle finance, Consumer
Finance, life and general insurance, stock broking, chit funds and distribution of financial products
such as life and general insurance products and units of mutual funds.

Comparison of competitors on 2019-20

S.No. Name CMP Rs.Cr P/E Mar Div. NP Qtr. Sales Qtr. ROCE %
Cap Rs.Cr Qtr. Rs.Cr Profit Qtr. Rs.Cr Sales
Yld %
Var % Var%

1. Bajaj Finserv 6162.00 26.36 98553.72 0.08 1215.15 43.75 14189.99 15.63 12.65

2. Muthoot 1286.00 17.10 51602.84 1.17 815.15 59.36 2400.35 27.70 16.22
Finance

3. Shriram 654.70 6.59 16566.71 0.76 224.35 -70.05 4168.42 7.63 11.36
Trans
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Conclusion and Way Ahead

Bajaj Finserv ltd is one successful Indian financial service company with average market
capitalization INR 113620.42 CR and market price RS 6163 as on August 2020. profit after tax
(PAT) of Bajaj Finserv ltd grew by 32% to 5,264 crore for FY2020. Customer franchise increased
by 24% to 42.60 million as of 31 March 2020. And the assets under management of the company
grew by 27% to 147,153 crore as of 31 March 2020. The combined ratio, which is a measure of
the profitability of the insurance operations, was 100.8% and expected to be among the best in the
industry.