5th July 2024
MCap of Bajaj Finance is 440,000 Cr
MCap of Bajaj FinServ is 252,000 Cr
If I subtract out the 51.34% stake of Bajaj Finance from the market cap of Bajaj FinServ, I am left with about 26,000 Cr.
For 26,000 Cr, you get a 74% stake each in BAGIC (general insurance) , BALIC (life insurance) and the whole of Bajaj AMC.
BAGIC and BALIC have 7.3, 5.8% of the market share respectively. I compared AUM of BAGIC with listed players (ICICI Lombard, HDFC Life) and the premiums written by BALIC with that of listed players (HDFC Life, ICICI Prudential). BAGIC and BALIC if listed independently, for the 74% share, would be at lease 25,000 Cr and 30,000 Cr respectively.
The AMC business just started a year ago, so still pretty small (AUM 10,000 Cr), but growing rapidly. Given Bajaj’s history of incubating comapnies, seeing what they did with Bajaj Housing Finance (100% owned within Bajaj Finance) getting to 1731 Cr PAT within 6 years, I am confident that the AMC business will do well. By the way, the housing finance comapny will get demerged and listed separately by Sep 2025. It should command a market cap of 50,000 if compared to listed peers.
For those who would have be happy to buy Bajaj Finance today, FinServ might be interesting to consider instead. You basically get BAGIC or BALIC for free – that’s 6-8% of India’s general or life insurance business. Not a bad deal. And who know what becomes of the AMC.
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