FINANCIAL MANAGEMENT

ASSIGNMENT ON : Analyse the

present position of Bajaj FinServ in
India .

NAME: NANDALAL MEHER

ROLL NO: BBA/2022-25/27
COURSE: BBA [HONOURS]

GUIDED BY: PROF.PRARTHANA

MISHRA

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 CONTENT
SL.NO TOPICS FROM TO
1 INTRODUCTION

2 BAJAJ FINSERV: MARKET

POSITION AND
PERFORMANCE

3 FINANCIAL OVERVIEW

4 BAJAJ FINANCEC -
OVERCOMING
CHALLENGES EMBRACING
&GROWTH
OPPORTUNITIES
5 CONCLUSION

6 BIBILOGRAPHY

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1.INTRODUCTION

The financial services sector in India plays a pivotal role in the country's
economic growth and stability. It encompasses a wide range of services,
including banking, insurance, asset management, and non-banking financial
companies (NBFCs). Among the prominent players in this sector is Bajaj
FinServ, a major NBFC that has made significant strides in financial services,
insurance, and lending. This assignment critically analyses the present position
of the financial service sector in India, with a particular focus on Bajaj FinServ,
to understand the factors influencing its performance and future trajectory.

1.1 Overview of the Indian Financial Services Sector

 Growth and Market Size

o The Indian financial services sector is one of the fastest-growing in the
world. In recent years, it has seen tremendous growth due to factors such as
rising income levels, rapid digitalization, and increased access to banking
services.
o The sector is expected to expand at a Compound Annual Growth Rate
(CAGR) of around 9.5% from 2021 to 2025, driven by growth in NBFCs,
insurance, and fintech innovations.
o Government Initiatives like financial inclusion programs (e.g., Pradhan
Mantri Jan Dhan Yojana), and digital payment platforms such as Unified
Payments Interface (UPI) have enhanced the reach of financial services.
 Challenges Facing the Sector
o Despite growth, the financial service sector faces challenges including rising
Non-Performing Assets (NPAs) in banks and NBFCs, increasing
competition from fintech startups, and regulatory constraints.
o Macroeconomic factors like inflation and global economic volatility also
pose risks to growth.
o Compliance with regulatory frameworks like RBI guidelines, Basel norms,
and the upcoming Digital Personal Data Protection Bill are also critical to
the sector’s sustainability.

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1.2 Bajaj FinServ: Overview

 Company Background
o Bajaj FinServ is a diversified NBFC, primarily involved in consumer
finance, SME lending, wealth management, and insurance services.
Established as a subsidiary of Bajaj Holdings and Investments Limited, it has
grown into a major financial services conglomerate.
o The company is structured into three major segments: Bajaj Finance Limited
(lending and consumer financing), Bajaj Allianz Life Insurance, and Bajaj
Allianz General Insurance.

 Importance of Bajaj FinServ in the Indian NBFC Sector:

o Bajaj FinServ is a market leader in the NBFC space, known for its
innovative products, use of technology, and customer-centric approach. It
plays a pivotal role in the Indian NBFC sector for several reasons:
o Retail Financing Expertise: Bajaj FinServ has revolutionized consumer
lending in India, particularly in areas such as personal loans, vehicle loans,
and consumer durable financing.
o Extensive Reach: Its presence across urban and rural India has made it a key
player in promoting financial inclusion. The company has tapped into
markets where traditional banking services are either unavailable or
inadequate.
o Tech-Driven Innovation: Bajaj FinServ leverages digital platforms and
technology to enhance customer experiences, offering seamless, paperless
loan approvals and insurance services through mobile apps and online
portals.
o Strong Financial Performance: Bajaj FinServ’s consistent financial growth
and diversified business model have made it a benchmark in the NBFC
sector, driving competition and setting high standards in terms of customer
service, innovation, and financial performance.

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2.BAJAJ FINSERV: MARKET POSITION AND
PERFORMANCE

2.1 Business Overview

 Comprehensive Offerings: Bajaj FinServ operates across multiple financial
domains, including consumer finance, insurance, and wealth management. It
offers a variety of financial products such as personal loans, consumer
durable loans, home loans, and small and medium enterprise (SME)
financing.
 Consumer Finance: The consumer finance segment is crucial for Bajaj
FinServ, particularly in offering personal loans and consumer durable
loans. These products cater to the growing demand for credit among
individuals looking to finance everyday purchases, medical expenses, and
personal needs.
 Insurance Products: Through its subsidiary Bajaj Allianz, the company
offers a diverse range of insurance products, including life, health, motor,
and property insurance. This not only helps in diversifying its revenue
streams but also enhances customer loyalty by providing comprehensive
financial solutions.
 Wealth Management: Bajaj FinServ has also ventured into wealth
management, providing investment advisory services, mutual funds, and
portfolio management. This segment appeals to high-net-worth individuals
seeking personalized investment strategies.
 Importance of Lending: The lending business remains a cornerstone of
Bajaj FinServ's strategy, especially in segments like consumer durable loans
and SME financing. The company has positioned itself as a leader in the
consumer durable loans market, which has seen increased demand due to
rising disposable incomes and consumer spending.

2.2 Market Share and Competitive Position

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 Share price: Bajaj FinServ’s share price was trading at Rs 1864.25 on
October 16, 2024, which was a 0.56% increase.
 Market performance: Bajaj FinServ’s stock has shown a strong
performance over the past three months, with a return of 16.90%.
 Emerging businesses: Bajaj Fiserv is growing its emerging businesses,
including Bajaj Fiserv Health, Bajaj FinServ Direct, Bajaj FinServ Asset
Management, and Bajaj FinServ Ventures.
 Mutual fund and FII holdings: As of June 30, 2024, the mutual fund
holding in Bajaj FinServ was 2.64%, while the FII holding was 8.14%.
 Public holding: Bajaj FinServ has a 39.17% public holding.
 Net profit: In its last quarter, Bajaj FinServ posted a net profit of 2,137.70
Crores.
 P/E ratio: Bajaj FinServ’s TTM P/E ratio is 30.34, compared to the sector
P/E of 15.53.
Bajaj FinServ is a financial services company that was incorporated in India in
2007. It is part of the Bajaj Group, one of India's leading conglomerates.
 Market Share in NBFC Sector: Bajaj FinServ is one of the largest non-
banking financial companies (NBFCs) in India, holding a substantial market
share. It is consistently ranked among the top players in the consumer
finance segment.
 Comparison with Key Competitors: In comparison with major competitors
such as HDFC and ICICI, Bajaj FinServ has carved out a significant niche,
particularly in the consumer lending space. While HDFC and ICICI Bank
focus more on traditional banking services, Bajaj FinServ’s agility in
adapting to consumer needs gives it a competitive edge.
 Customer-Centric Services: Bajaj FinServ stands out for its customer-
centric approach, emphasizing ease of access to financial products and quick
loan approvals. This has fostered strong customer relationships and loyalty,
setting it apart from competitors.
 Digital Innovations: The company leverages technology to enhance
customer experience. Its digital platforms enable customers to apply for
loans, manage their accounts, and access financial products seamlessly. The
emphasis on digital innovation allows Bajaj FinServ to reach a broader
audience and improve service delivery.

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2.3 Financial Performance

 Recent Performance Highlights: Bajaj FinServ has shown robust financial

performance, with significant revenue growth driven by increased loan
disbursements and diversified product offerings. The company reported a
revenue increase of approximately 20% year-on-year in the last financial
year, reflecting strong demand for its products.
 Profitability Metrics: The company's profitability has remained strong, with
a reported net profit margin of around 10%. This is supported by efficient
cost management and a focus on high-yield lending products.
 Loan Disbursement Growth: Loan disbursements have seen substantial
growth, with the company disbursing over ₹1 trillion in loans in the last
fiscal year. This growth is attributed to increasing consumer confidence and
expanding market opportunities in the lending sector.
 Key Metrics: Bajaj FinServ's key financial metrics indicate a solid
performance:
o NPAs: The company's NPAs are maintained at a relatively low level, around
1.5%, showcasing effective risk management strategies.
o Return on Equity (ROE): Bajaj FinServ has achieved a return on equity of
approximately 15%, reflecting efficient use of shareholder capital.
o Cost-to-Income Ratio: The cost-to-income ratio is around 45%, indicating
good operational efficiency.
 Challenges in Credit Quality: Despite its strong performance, Bajaj
FinServ faces challenges related to maintaining credit quality amid economic
uncertainty. Factors such as rising inflation and potential economic
slowdowns could impact borrowers' repayment capacities, necessitating
careful monitoring and management of credit risk.

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 3. FINANCIAL OVERVIEW
3.1. INCOME STATEMENT ANAYSIS
BAJAJ FINSERV Income Statement Analysis
No. of Months Year Ending 12 Mar-22* 12 Mar-23* % Change
Net Sales Rs m 684061 820712 0.2
Other income Rs m 329 8 -0.977
Total Revenues Rs m 684390 820720 0.199
Gross profit Rs m 214299 298684 0.394
Depreciation Rs m 5627 6778 0.204
Interest Rs m 96295 123803 0.286
Profit before tax Rs m 112706 168111 0.492
Tax Rs m 29571 46016 0.556
Profit after tax Rs m 83135 122095 0.469
Gross profit margin % 31.3 36.4
Effective tax rate % 26.2 27.4
Net profit margin % 12.2 14.9

 Operating income during the year rose 20.0% on a year-on-year (YoY) basis.
 The company's operating profit increased by 39.4% YoY during the fiscal.
Operating profit margins witnessed a fall and down at 36.4% in FY23 as
against 31.3% in FY22.
 Depreciation charges increased by 20.4% and finance costs increased by
28.6% YoY, respectively.
 Other income declined by 97.7% YoY.
 Net profit for the year grew by 46.9% YoY.
 Net profit margins during the year grew from 12.2% in FY22 to 14.9% in
FY23.

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3.2 BAJAJ FINSERV BALANCE SHEET ANALYSIS
%
No. of Months Year Ending 12 Mar-22* 12 Mar-23* Change
Net worth Rs m 398697 459365 15.2

Current Liabilities Rs m 1813679 2257529 24.5

Long-term Debt Rs m 854132 1016224 19
Total Liabilities Rs m 3327678 4044856 21.6

Current assets Rs m 250717 312023 24.5

Fixed Assets Rs m 3076961 3732834 21.3
Total Assets Rs m 3327678 4044856 21.6

 The company's current liabilities during FY23 stood at Rs

2,258 billion as compared to Rs 1,814 billion in FY22,
thereby witnessing an increase of 24.5%.
 Long-term debt stood at Rs 1,016 billion as compared to Rs
854 billion during FY22, a growth of 19.0%.
 Current assets rose 24% and stood at Rs 312 billion, while
fixed assets rose 21% and stood at Rs 3,733 billion in
FY23.
 Overall, the total assets and liabilities for FY23 stood at Rs
4,045 billion as against Rs 3,328 billion during FY22,
thereby witnessing a growth of 22%.

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3.3 BAJAJ FINSERV CASH FLOW STATEMENT
ANALYSIS
No. of
months 12 12
Year %
Particulars Ending 44621 44986 Change
Cash Flow from Operating
Activities Rs m -336700 -394795 -
Cash Flow from Investing
Activities Rs m 14454 -139452 -
Cash Flow from Financing
Activities Rs m 323258 510161 0.578
Net Cash Flow Rs m 1012 -24087 -

 BAJAJ FINSERV's cash flow from operating activities

(CFO) during FY23 stood at Rs -395 billion, an
improvement of 17.3% on a YoY basis.
 Cash flow from investing activities (CFI) during FY23
stood at Rs -139 billion on a YoY basis.
 Cash flow from financial activities (CFF) during FY23
stood at Rs 510 billion, an improvement of 58% on a YoY
basis.
 Overall, net cash flows for the company during FY23 stood
at Rs -24 billion from the Rs 1 billion net cash flows seen
during FY22.

3.4 RATIO ANALYSIS FOR BAJAJ FINSERV

 Solvency Ratios

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Current Ratio: The company's current ratio deteriorated and stood at 0.1x during
FY23, from 0.1x during FY22. The current ratio measures the company's ability
to pay short-term and long-term obligations.
Interest Coverage Ratio: The company's interest coverage ratio improved and
stood at 2.4x during FY23, from 2.2x during FY22. The interest coverage ratio
of a company states how easily a company can pay its interest expense on
outstanding debt. A higher ratio is preferable.
 Profitability Ratios
Return on Equity (ROE): The ROE for the company improved and stood at
26.6% during FY23, from 20.9% during FY23. The ROE measures the ability
of a firm to generate profits from its shareholders capital in the company.
Return on Capital Employed (ROCE): The ROCE for the company improved
and stood at 19.8% during FY23, from 16.7% during FY22. The ROCE
measures the ability of a firm to generate profits from its total capital
(shareholder capital plus debt capital) employed in the company.
Return on Assets (ROA): The ROA of the company improved and stood at
6.1% during FY23, from 5.4% during FY22. The ROA measures how
efficiently the company uses its assets to generate earnings.
No. of Months Year Ending 12 Mar-22* 12 Mar-23*
Current ratio x 0.1 0.1
Debtors’ Days Days 2 2
Interest coverage x 2.2 2.4
Debt to equity ratio x 2.1 2.2
Return on assets % 5.4 6.1
Return on equity % 20.9 26.6
Return on capital employed % 16.7

4. BAJAJ FINANCEC - Overcoming Challenges

Embracing &Growth Opportunities
FINANCIAL PERFORMANCE
Revenue Growth: Bajaj Finance witnessed a substantial increase in its
revenue, with a year-on-year (YoY) growth of 31.31%. This growth trajectory
indicates the company’s robust operational performance and ability to capitalize
on market opportunities.

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Profitability: The company reported a 22.4% YoY increase in profit after tax
(PAT), demonstrating efficient cost management and sustained profitability
despite economic fluctuations.
Asset Under Management (AUM): Bajaj Finance’s AUM crossed the
₹3,00,000 crore milestone, reflecting strong customer demand and confidence
in its financial products and services.
NPA Management: The company exhibited effective asset quality management,
with gross and net non-performing assets (NPAs) declining compared to the
previous year. It reflects prudent risk assessment and mitigation strategies.
Market Performance
Share Price Movement: Despite positive financial results, Bajaj Finance’s share
price experienced a decline following the Q3 earnings announcement. It could
be attributed to various factors such as market sentiment, investor expectations,
and regulatory concerns.
Market Capitalization: Bajaj Finance maintains a significant market
capitalization greater than ₹4,00,000 Cr, indicating its strong position in the
financial services sector.
Key Concerns and Challenges
Regulatory Impact: Bajaj Finance faces regulatory challenges, including
increased risk weights on unsecured consumer credit and directives to halt
certain lending products. These regulatory actions affect the company’s capital
adequacy and business operations.
Asset Quality: Elevated loan losses, particularly in rural B2C segments, pose
challenges to the company’s profitability and growth trajectory. Effective risk
management and collection strategies are crucial to addressing these concerns.
Investment Recommendations
Several brokerage firms have expressed bullish sentiments towards Bajaj
Finance’s stock, citing its growth potential and resilient business model.
Motilal Oswal Financial Services: Recommends a buy rating with a target price
of ₹8,500, highlighting the company’s robust customer acquisition and loan
trajectory.
Nirmal Bang: Suggests a buy rating with a target price of ₹9,100, emphasizing
stable AUM growth and a proven execution track record.

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JM Financial: Maintains a buy call with a target price of ₹10,000, citing Bajaj
Finance’s robust risk mechanisms, high growth, and superior return ratios.

Summary
Despite regulatory headwinds and temporary challenges in asset quality, Bajaj
Finance remains well-positioned for long-term growth. Investors are advised to
consider the company’s strong fundamentals, growth prospects, and
recommendations from brokerage firms before making investment decisions.
Additionally, monitoring regulatory developments and asset quality trends is
essential for assessing the company’s performance and mitigating investment
risks.

5.CONCLUSION
5.1 Summary of Key Insights
India's financial services sector is undergoing significant transformation,
marked by robust growth, increasing digitization, and evolving regulatory
frameworks. Bajaj FinServ stands out as a leading player within this landscape,
adeptly navigating challenges such as rising non-performing assets and
competition from fintech companies. The integration of technology, including
digital payment solutions and mobile banking, is reshaping customer
experiences and service delivery, while regulatory changes from the RBI and
SEBI influence operational strategies across the sector.

5.2 Future Prospects

Looking ahead, Bajaj FinServ is well-positioned to continue its leadership in the
non-banking financial company (NBFC) sector. Its commitment to innovation
and customer-centric strategies, including expanding into under-penetrated
markets and forming strategic partnerships with fintech’s, will enhance its
competitive edge. As the broader financial services sector adapts to ongoing
digital transformation and regulatory evolution, Bajaj FinServ's proactive
approach to risk management and operational efficiency will be crucial in
capitalizing on emerging opportunities and sustaining growth in an increasingly
complex environment. The future holds promise for both Bajaj FinServ and the

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overall financial landscape in India as they embrace innovation and adapt to
changing market dynamics.

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 BIBILOGRAPHY

https://pathfinderstraining.com/2024/02/08/bajaj-finance-overcoming-
challenges-embracing-growth-opportunities/
https://www.bajajfinserv.in/finance-digital-annual-report-fy22/
index.html#Bajaj-Finance-at-a-Glance
https://www.goodreturns.in/company/bajaj-finance/ratios.html
https://www.bajajfinserv.in/investments/financial-ratio-analysis
https://www.valueresearchonline.com/stocks/41250/bajaj-finserv-ltd/

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