Bajaj Finserv vs Bajaj Finance is the talk of the town in the matter of money! While both serve as NBFCs (Non-Banking Financial Companies), they’re a bit different.
Bajaj Finance mainly lends money, while Bajaj Finserv does more, like insurance and wealth management. If you’re wondering which one is better for you, then you have come to the right place!
Our comparison analysis will break down the differences, helping you figure out which suits you best. Whether you want a one-stop shop for various financial things or just need a loan, we’ll explore the details to make your decision easier.
(A) Synopsis of Bajaj Finserv and Bajaj Finance
Bajaj Finserv and Bajaj Finance are the two shining stars of the Bajaj group famous for giving humongous returns to the shareholders. The former is the parent company that owns major stake in three subsidiaries named-
- Bajaj Finance: 52.49%
- Bajaj Allianz Life Insurance: 74%
- Bajaj Allianz General Insurance: 74%
It means that Bajaj Finance operates under the umbrella of Bajaj Finserv. Do you know what the mind-blowing fact is? The market cap of Bajaj Finance is much higher than that of Bajaj Finserv. How much? Bajaj Finserv’s market cap is Rs.2.68 trillion while that of Bajaj Finance is Rs.4.46 trillion in 2023.
It seems as if the child has surpassed its parent in terms of growth and profits! Let’s look at the synopsis of both the companies.
(A.1) Bajaj Finserv
If you’re navigating the world of Indian financial services, Bajaj Finserv, headquartered in Pune, is a crucial name to know. As a non-banking financial services company, it zeroes in on lending, asset management, and an array of financial services.
Picture it as the parent overseeing Bajaj Finance, working to meet the financial needs and wealth-building goals of over 100 million customers.
With a strong presence in consumer finance, SME lending, wealth management, and insurance, Bajaj Finserv plays a vital role in shaping the Indian financial landscape, aiming for inclusivity and holding a significant market share.
(A.2) Bajaj Finance
Now, if you’re exploring the financial market in India, Bajaj Finance, born in 1987 and headquartered in Pune, is a key player. A subsidiary of Bajaj Finserv, it has grown into a powerhouse, offering consumer lending, SME lending, commercial lending, wealth management, and insurance services.
Whether you’re looking for diverse financial solutions or specific lending expertise, Bajaj Finance contributes significantly to the financial scene, addressing various needs and contributing to the broader success of the Bajaj Group.
(B) Bajaj Finserv vs Bajaj Finance: A Brief Overview
Let’s go through the profile of both the NBFCs (Non-Banking Finance Companies)-
|Name of the Company
|Bajaj Finserv Limited
|Bajaj Finance Limited
|Type of Company
NSE NIFTY 50 Constituent
BSE SENSEX Constituent
NSE NIFTY 50 Constituent
|Bajaj Holding and Investment Limited
|Bajaj Finserv Limited
Bajaj Allianz General Insurance,
Bajaj Allianz Life Insurance,
Bajaj Housing Finance,
Bajaj Finserv Markets
|Bajaj Financial Services,
Bajaj Housing Finance,
Bajaj Financial Securities
|Pune (Maharashtra, India)
|Pune (Maharashtra, India)
|Operating Income (FY23)
|Net Income (FY23)
|AUM (Assets Under Management)
|Total Assets (2023)
Despite having a larger market cap, the revenue of Bajaj Finserv (parent company) surpassed the revenue of Bajaj Finance! How’s that possible? You may wonder. Go through the following sections and you will know the secret!
(B.1) Recent Developments in Bajaj Finserv
As you explore Bajaj Finserv, consider it not just as a holding company but as the driving force behind Bajaj Finance, Bajaj Allianz Life Insurance, and Bajaj Allianz General Insurance. Recent approval from SEBI for an Asset Management Company (AMC) signals a commitment to diversification.
Impressively, it has delivered a substantial 500% return over the last five years. What sets Bajaj Finserv apart is its dedication to innovation, constantly refining product features, like the advancements seen in Bajaj Finserv cards.
Now, here’s an intriguing possibility!
With Bajaj Allianz Life Insurance and Bajaj Allianz General Insurance not yet listed, there’s an opportunity for value unlocking. Given the stellar performance of these entities, you, as a keen observer, can see how Bajaj Finserv stands to gain significant benefits as the holding company.
(B.2) What’s Special About Bajaj Finance?
When you delve into Bajaj Finance, it’s crucial to grasp that as a consumer financing powerhouse, its success hinges directly on its customer base—currently an impressive 5 crores. Despite the challenges brought on by the COVID-19 pandemic, the company managed to add a substantial 4.4 crore new customers in 2021, showcasing its resilience and growth.
What makes Bajaj Finance stand out is its knack for cross-selling?
Well, around 70% of its vast 5 crore customer base engages in this, highlighting a solid foundation of repeat customers. Dive into their world, and you’ll find a focus on data analytics that rivals Fin-tech companies, with strategic hires from top-notch institutions like IITs, a practice reminiscent of tech giants Google and Amazon.
Bajaj Finance’s Asset Under Management (AUM) towers over many banks in India, hitting the impressive mark of 1.8 lakh crores, while their deposit book amounts to a substantial 30,000 crores.
(C) Revenue Comparison of Bajaj Finserv vs Bajaj Finance
To know which company is doing better from a business perspective, we need to analyze the revenue sources of both companies. So, let’s get started-
(C.1) Revenue Growth
|Bajaj Finserv Revenue
|Bajaj Finance Revenue
As you navigate through the financial landscape, it’s worth noting that Bajaj Finserv, serving as the parent company of Bajaj Finance, claims a larger turnover. Yet, when delving into the Compound Annual Growth Rate (CAGR) over the past 5 years, Bajaj Finance takes the lead with an impressive profit growth of 23.00%, surpassing Bajaj Finserv’s 11.45%.
Turning to revenue growth, Bajaj Finserv shows a 15.79% 3-year CAGR, while Bajaj Finance boasts a higher rate at 19.94%.
The growth story continues for Bajaj Finance, especially in its Assets Under Management (AUM). In the fiscal year 2021-22, there was a remarkable 26.3% Year-over-Year (YoY) increase, reaching Rs.181,300 Cr. If you’re keeping an eye on sustained financial growth, these numbers certainly paint an interesting picture for Bajaj Finance’s continuous upward trajectory.
(C.2) Revenue Sources of Bajaj Finserv
As you might already know, Bajaj Finserv stands out as the financial services arm of Bajaj Holding and Investment Ltd, venturing into diverse domains such as asset management, wealth management, and insurance.
|Revenue Streams of Bajaj Finserv
|% of Revenue Earned
Now, let’s dive into the details-
Playing a substantial role, retail financing constitutes a robust 44% of the overall revenue. Especially popular in urban areas, it has become a significant contributor to India’s credit cycle, primarily providing credit facilities to customers.
Diversifying further, Bajaj Finserv, in collaboration with Allianz SE, extends its reach to general insurance, covering various categories except life insurance. This segment constitutes a notable 29% of the revenue.
Taking a closer look at the revenue breakdown, the life insurance segment makes a significant 26% contribution. Through a longstanding joint venture with Allianz SE, Bajaj Finserv operates Bajaj Allianz Insurance, offering products geared towards financial planning and security.
In a move towards sustainability, Bajaj Finserv owns and operates 138 windmills with a collective capacity of 65.2 MW. While contributing around 0.04% of the revenue, this initiative reflects the company’s commitment to a green and renewable future.
Bajaj Finserv’s diverse investments, accounting for 0.8% of revenues, illustrate a multifaceted approach to financial endeavors beyond its primary sectors. As you explore these facets, it becomes clear how Bajaj Finserv navigates a broad spectrum of financial services.
(C.3) Revenue Sources of Bajaj Finance
|Revenue Streams of Bajaj Finance
|% of Revenue Earned
|Loans against Securities
Let’s breakdown the revenue streams of Bajaj Finance-
As you delve into personal finance, exploring consumer lending, Bajaj Finance becomes your go-to for credit needs—be it consumer durable loans, lifestyle finance home loans, credit cards, or two-wheeler and three-wheeler loans. Notice from the revenue breakdown, the Consumer lending segment takes a substantial lead, contributing over 45.9%.
For your small and medium-scale business ventures, Bajaj Finance is your ally. With no need for collateral and straightforward requirements at low-interest rates, this segment plays a crucial role, contributing about 17.4% to the overall revenue.
Venturing into rural territories, Bajaj Finance extends a line of credit crafted for farmers in agriculture. The Kisan credit card scheme, designed for hassle-free onboarding, offers loans and mortgage assistance, contributing 12.7% with promising growth in rural areas.
In urban landscapes, if you’re considering secured loans, Bajaj Finance provides a solution. Offering loans up to Rs.5 crores against property, this segment significantly contributes, making up 11.7% of the total revenue.
As businesses evolve, especially in India’s startup scene, you may find Bajaj Finance catering to your needs. Offering loans up to Rs.45 lakhs at competitive interest rates, this segment, addressing short-term requirements, contributes 7.2% to the revenue.
Loans against Securities
Should you seek financial assistance against securities, Bajaj Finance has you covered. This segment, contributing 5.1% to the total revenue, exemplifies the company’s commitment to providing diverse lending solutions tailored to your specific needs.
(D) Bajaj Finserv vs Bajaj Finance: Net Profit Comparison
Let’s compare the net profit made by Bajaj Finserv and Bajaj Finance over the last couple of years-
|Bajaj Finserv Net Profit
|Bajaj Finance Net Profit
As you track the financial landscape, take note of Bajaj Finance’s remarkable journey over the last five years. Its share price has surged 3.5 times from Rs. 1,701 in July 2017 to an impressive Rs. 6,255 today. Meanwhile, Bajaj Finserv has seen its share price grow about 2.5 times during the same period.
Consider the dynamics: Bajaj Finserv’s financial health is intricately tied to the performance of its subsidiaries, directly impacting its profitability. In contrast, Bajaj Finance operates independently, and its success is reflected in direct profit growth.
Looking ahead, given the promising outlook for the insurance industry, Bajaj Finserv is well-positioned to reap significant benefits from its insurance arm. This strategic move positions the company to tap into the future potential of a growing sector.
Note: When it comes to NBFCs, Jupiter (Neo Bank) is getting quite popular nowadays. Visit the article Jupiter vs Fi Money for detailed information.
(E) Summing up Bajaj Finserv vs Bajaj Finance: Which is Better?
Now comes the most anticipated question- which company is a better investment? Let’s break it down.
Bajaj Finserv’s market cap stands at Rs.2.68 trillion while Bajaj Finance’s market cap stands at Rs.4.46 trillion.
We can’t deny the fact that the recent increase in the Foreign Direct Investment (FDI) limit in the Insurance Sector, encompassing Life Insurance and General Insurance, from 49% to 74% has market implications. Given the high capital requirement in this growing sector, Bajaj Finserv, with its 74% stake in Bajaj Allianz Life Insurance and Bajaj Allianz General Insurance, is poised to benefit by divesting capital.
Considering that Bajaj Finserv holds 52% of Bajaj Finance’s shares, the calculated market cap for Bajaj Finserv surpasses its actual market cap.
In essence, Bajaj Finserv appears undervalued compared to its true worth, presenting itself as a value company, whereas Bajaj Finance leans heavily on growth.
Here’s a straightforward suggestion: both companies are excellent.
If you lean towards growth, Bajaj Finance is your focus. On the other hand, if you are a value-oriented investor, Bajaj Finserv is worth a closer look.
However, you must never forget the fact that investing in stocks and mutual funds carries market risks. This write-up is meant for educational purposes. We don’t offer any advice or recommendations. Therefore, always read all the documents carefully!
Remember, for substantial returns, plan for an investment horizon beyond 5 years and, if possible, consider holding onto these stocks for an extended period.