Bajaj Finserve

 

Industry Profile  :  India has a diversified financial sector undergoing rapid expansion, both in terms of strong growth of existing financial services firms and new entities entering the market. The sector comprises commercial banks, insurance companies, non-banking financial companies, co-operatives, pension funds, mutual funds and other smaller financial entities. The banking regulator has allowed new entities such as payments banks to be created recently thereby adding to the types of entities operating in the sector. However, the financial sector in India is predominantly a banking sector with commercial banks accounting for more than 64 per cent of the total assets held by the financial system. The Government and Reserve Bank of India (RBI) have taken various measures to facilitate easy access to finance for Micro, Small and Medium Enterprises (MSMEs). These measures include launching Credit Guarantee Fund Scheme for Micro and Small Enterprises, issuing guideline to banks regarding collateral requirements and setting up a Micro Units Development and Refinance Agency (MUDRA). With a combined push by both government and private sector, India is undoubtedly one of the world’s most vibrant capital markets.

Driven by strong participation from retail investors and creation of awareness by Securities and Exchange Board of India (SEBI), equity mutual fundsDriven by strong participation from retail investors and creation of awareness by Securities and Exchange Board of India (SEBI), equity mutual funds witnessing large inflows which were kept in banking system before 2017. The revenues of the brokerage industry in India are estimated to grow by 15-20 per cent to reach Rs 18,000-19,000 crore (US$ 2.80-2.96 billion) in FY2017-18, backed by healthy volumes and a rise in the share of the cash segment.

The Indian life insurance industry has begun to recover and is likely to report 12-15 per cent growth in FY 2016-17.

In 2016, 2.4 million new demat accounts were opened by Indians, the highest number of account openings since 2008, led by higher number of initial public offerings (IPOs) and greater interest in mutual fund investments. SBI, the second largest issuer of credit cards in India, has reported issuance of 115,000 new cards in December 2016, post demonetisation, taking its total card issuance to 4.75 million

Company Profile  : The company was formed in April 2007 as a result of its demerger from Bajaj Auto Limited to further the Group’s interests in financial services. This demerger enabled Bajaj Finserv to independently run the core businesses of Lending, Insurance and Wealth Advisory.

The company is Holding company of Bajaj Group for Financial Services. Its insurance joint ventures with Allianz SE, Germany, namely Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited are engaged in life and general insurance business respectively. Its subsidiary Bajaj Finance Limited is a Non-Banking Finance Company engaged in consumer finance, SME finance and commercial lending and wealth management.

Shareholding Pattern  :  48 promoter entities hold 58.35%. Mutual Funds hold 3.7% Financial institutions hold 0.1%. 2.97% held by insurance companies. 7.89% held by Foreign Investors. 26.99% held by general public.

Financials and Ratios  : 

 2010 - 112011 - 122012 - 132013 - 142014 - 152015 -162016 - 17
Revenue2,444.573,904.785,074.896,024.997,590.389,446.7424,522.06
Net profit1,114.841,337.771,573.641,544.081,689.791,863.272,261.92
NPM45.60%34.25%31%25.62%22.26%19.72%9.22%
EPS779310397106117142
Book value375.72505.31683.41819.29962.221,223.381,466.58
Debt to equity1.321.721.181.662.012.652.99
Efficiency Ratio25.92%23.93%22.92%25.91%27.8529.27%64.76%
Dividend per share1.51.751.751.751.75
Dividend payout46.9533.3922.1117.07
ROE19.7316.2615.2413.7014.01
ROA2.402.071.911.801.75

Future Prospects  :  India is today one of the most vibrant global economies, on the back of robust banking and insurance sectors. The relaxation of foreign investment rules has received a positive response from the insurance sector, with many companies announcing plans to increase their stakes in joint ventures with Indian companies. Over the coming quarters there could be a series of joint venture deals between global insurance giants and local players. In such senario, Where The subsidiary of company Bajaj Allianz Life Insurance and general insurance is well known, the company is poised for growth.

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About Ashutosh Tilak

Tracking Indian Capital Market since 2010. Finance Student, On this blog I am writing about finance and Investing. You can contact me analystashu@gmail.com or @androidashu & @InsideFinanc on twitter