Financials

Figures converted from INR at historical FX rates — see data/company.json.fx_rates. Ratios, margins, and multiples are unitless and unchanged.

Financials — Bajaj Finserv Limited (BAJAJFINSV)

1. Financials in One Page

Bajaj Finserv is not one business but a portfolio of five financial-services franchises wrapped in a listed holding company: Bajaj Finance (NBFC, ~51.85% owned), Bajaj Allianz Life Insurance (74%), Bajaj Allianz General Insurance (74%), Bajaj Housing Finance (~88.74% owned via Bajaj Finance), plus an AMC, broking arm, and the Bajaj Markets fintech platform. Consolidated revenue compounded at ~25% per year for a decade — from $1,813M in FY2015 to $16,044M in FY2026 — driven almost entirely by the NBFC loan book. Margins are stable at the operating line (37-38% pre-interest, pre-tax) because lending and insurance both throw off relatively predictable spread economics. Operating cash flow has been structurally negative for ten of eleven years, which is normal for a lender (every disbursed dollar shows as a use of cash) but means the standard FCF lens does not apply — the right cash-flow test here is loan growth funded against incremental borrowings, plus parent dividends from the operating subsidiaries. Leverage has scaled with the NBFC: borrowings have grown 11x to $45,829M, equity 4.7x to $8,306M, so book leverage is now ~5.5x and rising. The valuation setup is mid-pack — P/E ~28x and P/B ~3.55x on consolidated parent EPS, sitting between the bank comparables (HDFCBANK at 15.5x P/E) and pure life-insurance (SBILIFE at 75.7x). The single financial metric that matters most right now is the per-share impact of the announced Allianz buyout of the residual 26% stake in the two insurance JVs; today roughly half of consolidated profit accrues to minorities, and any incremental ownership in the insurance arms is direct parent-EPS accretion.

2. Revenue, Margins, and Earnings Power

Bajaj Finserv's top line is a direct readout of the credit cycle and insurance premium growth in India. Revenue compounded at 25% annually over FY2015-FY2026 — fast enough that the company has roughly doubled every three years. The growth slowed visibly in FY2020-FY2021 (covid disruption to lending) but reaccelerated, with FY2024 (+34%) and FY2025 (+21%) marking the strongest absolute additions in the company's history. FY2026 growth moderated to +12.5%, the first single-year deceleration in three years.

The shape of the chart matters more than the headline numbers. Three things to notice. First, operating income ($6,049M in FY26) is the pre-interest, pre-tax line — for a lender, this is essentially "net interest income plus insurance underwriting profit plus fee income." Second, the gap between operating income and net income is largely interest expense paid to depositors and bondholders ($3,010M in FY26) — about 50% of operating income. Third, net income growth has lagged revenue growth because (a) leverage was rebuilt after FY20 and (b) NBFC credit costs picked up in FY24-25, both compressing the pre-tax margin.

Margin direction over the past three years has been flat to slightly improving at the operating line (37-38%) but compressed at the net line (13.1% from 14.9% peak). The cause is the rising interest-expense share of revenue — as borrowings have grown faster than revenue, the cost of funding has eaten into earnings power. This is consistent with the broader NBFC sector through FY24-26: cost of funds rose with RBI repo hikes through 2024 and the easing cycle that began in 2025 has not yet fully passed through to bank-funded NBFCs like Bajaj Finance.

Recent quarterly trajectory

The quarterly trend confirms the slowdown thesis. Revenue growth in 4Q26 (+5.2% year-on-year) is materially below the 21-34% annual pace of FY24-25. Operating income held up at 38% of revenue — so the business is slowing in volume but holding pricing power. EPS pattern is choppier because of a $40M "other income" hit in 3Q26 (linked to one-off mark-to-market adjustments per the disclosed transcript notes) and the lumpiness of insurance underwriting outcomes between quarters.

3. Cash Flow and Earnings Quality

The most important sentence on this page: for a lender, operating cash flow as conventionally reported is negative when the loan book is growing, because every new disbursement is a cash outflow even though it produces interest income for years. Bajaj Finserv's reported "operating cash flow" has been negative in 10 of the last 11 years for exactly this reason. The traditional FCF test (operating cash flow minus capex) does not work here, and "FCF margin" is not the right earnings-quality metric. Instead, the right test is whether net interest income, fee income, and insurance underwriting profit translate into accounting profit at a stable conversion rate — which they do, evidenced by net income growing 5.4x over a decade with no large non-cash items.

The mirror-image pattern is the signature of a balance-sheet-growing lender. Operating cash flow runs deeply negative (loan disbursements), investing cash flow is mildly negative (purchase of securities for the insurance investment book), and financing cash flow runs deeply positive (incremental borrowings to fund loan growth). FY2021 was the one anomaly — covid-driven loan-book contraction and high prepayments produced a brief positive OCF print, the only one in the dataset.

The third bar — operating cash flow with loan disbursements added back — is the closer proxy for the "real" cash-generating capacity of the business. It tracks net income reasonably well, indicating that earnings quality is acceptable: pre-provisioning operating profit converts to cash at roughly 1.0-1.2x of reported net income once the working-capital-of-a-lender effect is removed. (The adjustment is illustrative — Bajaj Finserv does not publish a clean pre-disbursement OCF figure, so the bars above are reconstructed from segment dispatches in the FY25 annual report and concall transcripts.)

The cleanest earnings-quality test for this kind of business is the credit cost trajectory — provisions taken against the loan book each year. Through FY24-25 the NBFC subsidiary's credit costs rose materially (management has called this out on the past four earnings calls), but FY26 disclosures show stabilisation. The interest-cover ratio (operating income / interest expense) was 2.0x in FY26, identical to FY25, signalling no near-term solvency stress.

4. Balance Sheet and Financial Resilience

For a financial-services holdco, balance-sheet quality is everything. Bajaj Finserv's consolidated balance sheet has grown from $14,108M to $80,856M in 11 years — a 5.7x expansion — funded almost entirely by borrowings ($4,207M to $45,829M, 11x). Equity grew 4.7x.

Two signals from the leverage chart. First, the borrowings-to-equity ratio has stepped up sharply since FY23 — from 4.6x to 5.5x — reflecting the accelerated NBFC AUM growth that has occurred in parallel with the Bajaj Housing Finance IPO and ramp-up. Second, the interest coverage ratio (operating income / interest expense) has held at ~2.0x through this period, indicating that incremental borrowings are productive but with no buffer for a credit shock. A 100 bp adverse move in funding costs would lower coverage to ~1.7x, still safe but materially less comfortable.

Sector-specific resilience indicators

Standard "net debt / EBITDA" framing does not apply to a financial-services holdco. The relevant resilience metrics are:

The crucial observation: the holdco itself carries almost no debt. All meaningful borrowings sit at the operating subsidiaries, each separately regulated and separately capitalised. The parent's flexibility comes from its ability to up-stream dividends from the subsidiaries and to recycle capital — exactly the mechanism being used now to fund the Allianz buyout. From a downside perspective, a stress at any one operating subsidiary cannot mechanically force a default at the holdco.

5. Returns, Reinvestment, and Capital Allocation

Returns on capital here are mid-pack by Indian financial-services standards — not the 18-22% ROE machine that the standalone Bajaj Finance NBFC produces (which is the highest in the sector), because the consolidated holdco return is dragged down by (a) the parent's slice of insurance returns (insurance ROEs are structurally lower in the growth phase) and (b) the parent equity that funds non-yielding strategic stakes.

Note that the ROE line above is calculated on consolidated net income divided by shareholders' equity — this is the gross figure. Parent ROE (the metric an equity investor actually owns) is closer to 13% in FY26, materially below the 25% consolidated figure, because half of consolidated profit flows to minorities. This is one of the most important valuation considerations for this stock.

Per-share book value has compounded at ~17% per year over the past four years (in INR; the USD CAGR is lower because of FX depreciation), parent EPS at ~21% per year. Share count growth has been minimal (the FY23 step from 80 to 159 crore shares reflects a 1:1 bonus issue, not dilution). Capital allocation has been overwhelmingly reinvestment back into the operating businesses — almost no buyback, and dividend payout ratios in the 1-2% range. The dividend yield of 0.09% is among the lowest in any major Indian financial-services name.

The shareholder structure has shifted in the last year too: promoter holding dropped from 60.64% to 58.81% in Q1 FY26 (a ~1.8 percentage-point reduction), with the gap absorbed by DII (domestic institutional investors). Management has not flagged this as a sustained programme — promoters periodically rebalance across the three listed group entities (Bajaj Auto, Bajaj Finserv, Bajaj Holdings).

6. Segment and Unit Economics

The screener segment dataset for Bajaj Finserv is not granular in this run, but the FY25 annual report provides the structural mix. Approximately 45-50% of consolidated revenue and operating profit comes from Bajaj Finance (the NBFC), with the balance split between the two insurance JVs, the housing finance subsidiary, and the smaller AMC/broking/fintech businesses.

The single-most-important segment observation: Bajaj Finance, the publicly listed NBFC subsidiary, has its own equity stack and its own ROE (currently ~18-19%, having peaked at 24% in FY23). Bajaj Finserv owns 51.85% of it. The consolidation accounting brings 100% of the NBFC's revenue and net income onto Bajaj Finserv's books, then deducts 48.15% as minority interest. The other 50% of the consolidated picture comes from the wholly-controlled insurance JVs (where Allianz currently holds 26%) and from Bajaj Housing Finance.

Geographic mix is overwhelmingly Indian — over 99% of revenue is generated within India, mostly through urban and semi-urban retail customers. There is no material currency risk to a domestic investor; for a USD investor, the INR-USD trajectory becomes a structural drag (about 2-3% per year of FX depreciation).

7. Valuation and Market Expectations

Valuation here requires care because the headline P/E moves materially depending on whether you use parent EPS (the slice of earnings that legally belongs to the public shareholder), consolidated EPS (the gross figure published by exchanges), or sum-of-parts (the value of each subsidiary stake separately marked).

The valuation has derated quietly over the past three years from 36-38x to 28x — about a 25% multiple compression even as parent EPS has compounded at greater than 20%. The stock has been a relative underperformer because (a) Bajaj Finance, the engine, has itself derated from its FY22 peak; (b) credit-cost worries through FY24-25; and (c) the holdco discount has widened modestly.

Analyst targets (from broker reports filed in the past six months):

Spot $18.00 sits ~18% below the consensus target of $23.34 and ~30% below Jefferies' $25.01. The bear case ($15.63) is roughly 13% downside — implying current price already absorbs significant credit-cycle pessimism. The asymmetry favours the upside, but only if (i) the Allianz buyout closes on reasonable terms and (ii) Bajaj Finance's credit-cost normalisation through FY27 plays out as guided.

8. Peer Financial Comparison

The peer table tells a clear story. Bajaj Finserv trades at a P/E premium to bank comparables (HDFCBANK 15.5x, ICICIBANK 16.5x) and roughly in line with its diversified-holdco peer (ABCAPITAL 24.6x), but its ROE (13.2%) lags the standalone NBFCs (CHOLAFIN 19.3%, SHRIRAMFIN 16.4%) and general insurer ICICIGI (17.8%). The P/B premium (3.55x vs ABCAPITAL's 2.72x) is the cleanest read of "Bajaj brand premium" — investors will pay more book-value multiples for the Bajaj family franchise.

The peer gap that matters: SBILIFE at P/E 75.7x and P/B 9.81x is what a pure-play Indian life insurer commands in the market. If you assume the Bajaj Allianz Life arm is half of SBILIFE's size and trades at half the multiple (P/E ~38x), that segment alone represents a meaningful slice of Bajaj Finserv's market cap — but it is buried inside a consolidated lower-multiple holdco. Successful execution of the Allianz buyout could partly close this conglomerate discount.

9. What to Watch in the Financials

What the financials confirm: Bajaj Finserv is a high-quality compounder with stable operating margins, dependable balance-sheet growth, and a high-rated capital structure. ROE on the parent equity is a respectable 13% even after the holdco drag.

What the financials contradict: the headline P/E of 28x looks expensive for "only" 13% parent ROE, but the consolidated growth picture (revenue +25% CAGR, NI +20% CAGR over a decade) and the value trapped inside the insurance JVs argue that the multiple is justified — and arguably cheap if the Allianz buyout closes.

The first financial metric to watch is the per-share impact of the Allianz buyout in the FY27 results — specifically, how much of the residual 26% stake in the two insurance JVs Bajaj Finserv ultimately acquires, at what implied multiple, and how much parent EPS accretion that translates into. If parent EPS jumps to $0.73-0.78 in FY27 versus the $0.64 base, the current ~28x P/E becomes a ~24x P/E — and the stock looks substantively cheaper without any change in spot price.