Bajaj Finance Ltd.

In order to know if a company is worth your investment, you need to research about a few critical aspects of the company. You need to have confidence on the current Management, previous financial performance, current stock trend to understand the sentiment of the market and an outlook into the future.

My analysis will be focused on these 4 broad categories after which I will make a conclusion on the action an investor should take; that is, if the stock is a buy, sell, wait or drop.

• Buy – you should buy stock in this company
• Sell – if you currently hold stock, sell it
• Wait – wait and watch. If you have stock, keep hold on it, and if you do not have any stock then keep this on your watch list
• Drop – The stock is not worth your investment

About The Company

Bajaj Finance Ltd is one of the 37 companies owned by the Conglomerate Bajaj Group which was founded by Jamnalal Bajaj in Mumbai.

Bajaj Group entered the Banking industry in or around 2010. In 2007 the board of Directors of Bajaj Auto Ltd announced the approval of the De-merger of Bajaj Auto Ltd. This was done to strategically align with future growth opportunities and to allow different management teams to focus on their respective core businesses. This De-merger resulted in the creation of Bajaj Holdings and Investment Ltd (BHIL) and Bajaj Finserv Ltd (BFL) with the already existing Bajaj Auto Ltd (BAL).

While BHIL focuses on investments and new business opportunities, BFL will focus on wind energy generation, insurance and consumer finance. Bajaj Auto continues to keep the Auto business at the core of its business model.

This de-merger of Bajaj Auto Ltd has allowed the different Management teams of the newly formed subsidiaries to mitigate the risk of poorly managed businesses due to lost focus on the core business.

The shares of BAL were split between BAL, BHIL and BFL.

• BHIL – 56.5%
• BAL – 22.1%
• BFSL – 21.4%
• Total – 100.0%

The above table indicates the proportion in which your original cost of acquisition of Bajaj Auto shares will be apportioned to the new shares.

Manufacturing Undertakings include the two and three wheeler manufacturing. while the Strategic Bisiness Understaking comprising the generation of wind-energy using wind-farms, the insurance business conducted through its joint ventures Bajaj Allianz Life Insurance Company Ltd and Bajaj Allianz General Insurance Company Ltd, financial products distribution business conducted through Bajaj Allianz Financial Distributors Ltd and interests in retail / consumer finance business conducted by Bajaj Auto Finance Ltd.

Read more about how family name does not mean leadership positions in the Bajaj Group. Click here

Bajaj Holdings & Investment Limited (BHIL) is an India-based holding and investment company. The Company focuses on earning income through dividends, interest and gains on investments held. The Company’s other equities portfolio is a combination of listed and unlisted investments. BHIL invests in equities based on the Company’s views of returns from public equity markets, as well as opportunities in the private equity space. The Company invests in equities normally with an approximately five year holding horizon or even longer. The Company’s other equities investment portfolio includes financials, technology/pharma; consumers/education; sugar; material/metals/oil and gas; construction/infra, and telecoms and media. Its fixed income portfolio includes government securities, certificate of deposit (CD) and commercial paper (CP), corporate bonds and mutual funds. Its equity investments include strategic/group investments. Bajaj Auto Holdings Ltd. (BAHL) is the Company’s subsidiary.

Confidence On Management

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Previous Financial Performance

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Current Stock Trend, Indicating Market Sentiment

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Future Oulook

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Analysis Conclusion

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