Bajaj Finserv Ltd.: history, ownership, mission, how it works & makes money

A Brief History of Bajaj Finserv Ltd.

Bajaj Finserv Ltd. was incorporated in March 2007, emerging as a key player in the financial services sector in India. It operates as a parent company for various businesses such as lending, insurance, and wealth management, driven by a vision for facilitating financial inclusion.

By 2018, Bajaj Finserv reported a significant expansion, with its consolidated total income reaching approximately INR 29,000 crore. The firm achieved a net profit of around INR 4,200 crore for the financial year ending March 2018, marking a year-on-year growth of 27%.

As of March 2021, Bajaj Finserv's market capitalization stood at around INR 1.5 lakh crore. The company has consistently demonstrated strong growth, with the consolidated assets under management (AUM) rising to approximately INR 1.15 lakh crore during the same financial year.

The financial performance of Bajaj Finserv has been noteworthy, especially during the COVID-19 pandemic. In the financial year 2021-2022, the company recorded a consolidated revenue of INR 36,300 crore and a profit after tax (PAT) of INR 6,500 crore, reflecting a robust recovery from the previous year’s challenges.

In 2023, Bajaj Finserv continued to progress with a focus on digital transformation. The company reported an increase in its digital loan disbursements, reaching approximately INR 23,000 crore in the first half of the fiscal year 2023, showcasing a demand for quick access to credit in the post-pandemic economic environment.

Bajaj Finserv has also enhanced its insurance offerings, with its insurance subsidiary reporting a premium income of around INR 18,000 crore in the fiscal year 2022-23. The company’s distribution network has significantly expanded, contributing to its growth trajectory.

As of September 2023, Bajaj Finserv's stock price has shown resilience, trading around INR 1,600 per share, reflecting investor confidence and steady performance in the financial sector.

The company’s commitment to sustainability and social responsibility is evident through its various initiatives, including financial literacy programs aimed at improving the financial well-being of underserved populations.

A Who Owns Bajaj Finserv Ltd.

Bajaj Finserv Ltd., a key player in the Indian financial services sector, operates under the Bajaj Group, one of India’s most prestigious conglomerates. The ownership structure of Bajaj Finserv is diversified, comprising institutional investors, promoters, and retail investors.

As of October 2023, the promoter and promoter group holds a significant stake in the company, accounting for approximately 61.65% of the total shareholding. This group's ownership is primarily attributed to the Bajaj family, who have been instrumental in the company's strategic direction.

Institutional investors represent a substantial portion of the company's ownership as well, with entities such as mutual funds and insurance companies holding approximately 29.70% of the shares. This highlights the confidence that institutional stakeholders have in the company's growth trajectory.

Retail investors make up the remaining 8.65% of the shareholding. This segment has shown consistent interest in Bajaj Finserv, driven by the company’s robust financial performance and growth prospects.

The company has also attracted significant foreign institutional investment (FII), further boosting its capital base. The FII holding as of recent reports stands at around 15%, indicating a strong interest from global investors.

In terms of market capitalization, as of October 2023, Bajaj Finserv Ltd. is valued at approximately ₹1.35 trillion (around USD 16.3 billion), reflecting its status as one of the leading financial service providers in India.

Regarding share performance, Bajaj Finserv’s stock has shown considerable growth over the past year, with a 52-week high of approximately ₹1,979 and a 52-week low around ₹1,410. This fluctuating trend suggests both resilience and volatility in response to market conditions.

Overall, the ownership distribution of Bajaj Finserv Ltd. not only reflects the confidence of its promoters and institutional investors but also signifies a robust framework for future growth and expansion in the financial services industry.

Bajaj Finserv Ltd. Mission Statement

Bajaj Finserv Ltd. operates with a clear mission to "enable the financial empowerment of individuals and businesses through innovative and customer-centric financial solutions." This mission is articulated through its diverse offerings, including loans, insurance, and wealth management services.

As of the latest financial reporting in Q2 FY2023, Bajaj Finserv’s consolidated revenue stood at ₹27,882 crore, reflecting a year-on-year growth of 14%. The company's focus on customer-centric solutions is evident in its approach to technology-driven services, enhancing customer engagement and satisfaction.

The company's mission also emphasizes sustainability and social responsibility. Bajaj Finserv's initiatives in financial literacy aim to cater to the underserved segments of society, facilitating access to financial services. In FY2022, Bajaj Finserv dedicated ₹150 crore towards community initiatives, which included education, health, and skill development programs.

Bajaj Finserv's innovative approach is manifested in its digital platforms, enabling customers to access services conveniently. As of September 2023, the company reported that over 10 million users have registered on its digital platform, further solidifying its commitment to providing easy and efficient access to financial services.

The company is also a key player in the insurance sector, with its gross written premium reaching ₹17,000 crore in FY2023. Bajaj Allianz General Insurance, the insurance arm, reported a market share of 7.5% in the private sector.

Bajaj Finserv continues to expand its portfolio, focusing on diversification and innovation. The company's aim is to enhance financial inclusion, targeting a broad demographic that includes both urban and rural populations. With a network of over 2,500 branches and a strong online presence, it is well-positioned to achieve its mission.

How Bajaj Finserv Ltd. Works

Bajaj Finserv Ltd. operates as a financial services company based in India, specializing in various sectors such as lending, insurance, and wealth management. The company is a part of the Bajaj Group and has established a significant presence in the financial market.

As of August 2023, Bajaj Finserv reported a consolidated revenue of ₹19,477 crore for the financial year ending March 2023, reflecting a growth of approximately 24% year-on-year. The profit after tax (PAT) stood at ₹4,900 crore, with a net profit margin of about 25%.

Key Business Segments

Bajaj Finserv's operations are primarily divided into three major segments:

• Consumer Finance: This includes personal loans, home loans, and consumer durable loans. The loan book was around ₹1.5 lakh crore as of Q2 2023.
• Insurance: Bajaj Finserv offers life, general, and health insurance products through its subsidiaries. The insurance premium income for FY 2023 was reported at ₹26,500 crore.
• Wealth Management: The segment focuses on investment products and advisory services. Assets under management (AUM) exceeded ₹60,000 crore.

Financial Performance

The financial performance of Bajaj Finserv can be summarized as follows:

Growth Drivers

Bajaj Finserv has leveraged several key strategies to drive its growth:

• Diverse Product Offering: The company’s broad range of products caters to various customer segments, enhancing customer loyalty.
• Digital Transformation: The adoption of technology in customer interactions and service delivery has streamlined operations and increased efficiency.
• Strategic Partnerships: Collaborations with various entities to enhance distribution networks and service offerings have expanded market reach.

Market Position

Bajaj Finserv holds a prominent position in the Indian financial services industry. It ranks among the top five non-banking financial companies (NBFCs) in terms of assets and profitability. As of September 2023, Bajaj Finserv had a market capitalization of approximately ₹4.5 lakh crore.

The company is well-regarded for its strong risk management practices, which contribute to asset quality. The gross non-performing asset (GNPA) ratio was reported at 1.25% for Q2 FY 2023, a stable performance compared to previous quarters.

Future Outlook

Looking ahead, Bajaj Finserv aims for sustained growth through:

• Expansion into Rural Areas: Targeting underserved segments to drive consumer finance growth.
• Investment in Technology: Enhancing digital platforms to improve customer engagement.
• Focus on Sustainability: Implementing eco-friendly practices within operations and product offerings.

The company plans to maintain a healthy capital adequacy ratio, which was reported at 18% as of June 2023, above the regulatory requirement, ensuring stability and growth potential.

How Bajaj Finserv Ltd. Makes Money

Bajaj Finserv Ltd. operates as a financial services conglomerate in India, focusing on varied segments like lending, insurance, and wealth management. The company is well-known for its diversified revenue streams which contribute significantly to its overall profitability.

As of the fiscal year ending March 2023, Bajaj Finserv reported a consolidated revenue of ₹22,532 crores (approximately $2.7 billion), marking a year-over-year growth of **24%**. This growth can be attributed to increased demand in finance and insurance services following economic recovery post-pandemic.

Revenue Streams

Bajaj Finserv generates income through multiple channels, including:

• Financial Services (lending)
• Insurance Products (both life and general)
• Asset Management
• Investment Advisory Services

Financial Services

The financial services arm, Bajaj Finance Ltd., is the largest contributor to revenue, making up about **63%** of the total revenue. Specifically, Bajaj Finance had a total income of ₹19,067 crores in FY23, up from ₹15,045 crores in FY22.

Bajaj Finance generates income through personal loans, home loans, and business loans, with a burgeoning customer base exceeding **54 million** as of March 2023. The company reported a net interest income (NII) of ₹8,270 crores in FY23, reflecting a **27%** increase compared to ₹6,504 crores in FY22.

Insurance Business

The insurance segment, which includes Bajaj Allianz, contributes significantly to the overall revenue. Bajaj Allianz General Insurance achieved a premium income of ₹14,028 crores in FY23, while Bajaj Allianz Life Insurance reported ₹8,456 crores. This segment represented approximately **27%** of total revenue in FY23.

Market Trends

As of Q2 FY24, Bajaj Finserv continues to benefit from rising consumer demand for credit, with loan disbursals growing steadily. The non-banking financial company (NBFC) segment remains robust, with a market share of approximately **27%** in the consumer durable financing space.

Strategic Initiatives

The company has focused on diversifying its portfolio and investing in technology to streamline operations. The implementation of digital platforms led to a **30%** increase in digital transactions from FY22 to FY23, enhancing customer engagement and lowering acquisition costs.

Furthermore, Bajaj Finserv’s average return on equity (ROE) stood at **20%** in FY23, maintaining a strong position compared to industry averages, which hover around **15-18%**. This metric reflects the company’s efficient use of equity to generate profit.

Conclusion about Future Earnings

Looking ahead, Bajaj Finserv is poised for further growth, supported by expanding consumer credit demand and increasing insurance penetration in India, which remains relatively low at **3.69%** of GDP compared to global averages of **7-10%**. The company’s robust risk management, diversified offerings, and strategic initiatives are expected to drive sustained profitability.