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Bajaj Finserv
Our verdict on Bajaj Finserv isn’t the consensus take — see where we landed, and the one risk the bull case glosses over.
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The transaction has been finalized following regulatory approvals, resulting in the termination of joint venture agreements with Allianz SE.
“The existing joint venture agreements between the two insurance subsidiaries and Allianz SE are terminated.”
The company successfully completed the acquisition of the 23% equity stake held by Allianz SE in both Bajaj General Insurance and Bajaj Life Insurance on 8 January 2026.
“On 8 January 2026, Bajaj Finserv Limited (BFS) along with its Promoter Group entities, namely Bajaj Holdings & Investment Limited and Jamnalal Sons Private Limited, successfully completed the acquisition of 23% equity stake held by Allianz SE in the two insurance subsidiaries namely Bajaj General Insurance Limited and Bajaj Life Insurance Limited.”
The customer franchise reached 10.18 Crore by Q4 FY2025, representing a growth rate that tracks ahead of the 15-17% CAGR required to reach the 20 Crore target by 2029.
“Total Franchise 101.82”
For the first quarter of the target period (Q1 FY2026), consolidated revenue grew by 13% YoY, while the full-year FY2025 growth was 21%, which is within the guided CAGR range of 20-22%.
“Total Revenue (Consolidated) 35,451 31,480 13%”
The company is maintaining its scheduled investor communications regarding the Q1 FY26 period, indicating the corporate structure remains as previously guided during the regulatory approval phase for the Allianz stake buy-out.
“In furtherance to our letter dated 15 July 2025 & 26 July 2025, this is to inform that the transcript of the investors conference call held on Friday, 25 July 2025, has been hosted on the website of the Company and is available at.”
See the full cited Management analysis of Bajaj Finserv
How durable is the business?
Bajaj Finance continues to be the primary growth engine with a 26% increase in Assets Under Management (AUM) and a 17% growth in profit, maintaining a stable ROE of nearly 19%. (6 expanding, 4 shifted across 3 engines)
“The Company's diversified business model has enabled it to record a strong AUM growth of 26% at Rs.4,16,661 crores as of 31st March '25 as compared to Rs.3,30,615 crores as of 31st March '24.”
The group maintains a massive capital buffer, with estimated excess capital available increasing to ₹48,950 Crore as of March 2025, up from ₹31,457 Crore in 2021. Solvency margins across all insurance and lending arms remain significantly above regulatory minimums. (4 expanding, 1 stable across 3 engines)
“Estimated excess capital available 17,403 8,442 3,831 1,781 31,457... Estimated excess capital available 27,021 6,681 5,953 9,295 48,950”
The segment saw a 13% decline in Gross Written Premium (GWP) due to new accounting regulations (1/n basis) and lower participation in low-margin crop/government health tenders, though core retail lines grew 12% on an adjusted basis. (1 contracting, 1 stable across 1 engine)
“The gross return premium de-grew by 13% to Rs.4,326 crores versus Rs.4,962 crores for the same period last year.”
Bajaj Finserv is a major Indian financial services conglomerate that operates as a holding company for several market-leading subsidiaries. It provides a full range of financial solutions including consumer lending, mortgages, life and general insurance, and asset management to over 15 crore customers across India.
“39,708 Bajaj Finserv Consolidated +24%”
See the full cited Business Model analysis of Bajaj Finserv
Where does growth come from?
The AMC business is in a 'New Trend' phase of rapid scaling, crossing the ₹20,000 crore mark in less than two years. (1 new trend, 2 accelerating across 3 signals)
“We believe the Bajaj Finserv AMC is the fastest to cross the Rs.20,000 crores mark in less than two full years of operations.”
Customer acquisition is accelerating, with new loans booked increasing from 80 lakh to over 1 crore in the same quarter year-on-year. (9 accelerating, 1 steady across 10 signals)
“The number of new loans booked in Quarter 4 was up 36% to over Rs.1 crore as against Rs.80 lakh in the same period last year.”
Transaction volumes are accelerating as the provider network expands, showing a 21.7% increase over the previous quarter. (2 accelerating across 2 signals, 2 leading indicators)
“In Quarter 4, FY25, Bajaj Finserv Health carried out 28 lakh health transactions versus about 23 lakhs in the immediately preceding quarter, which is Quarter 3 of '25.”
The group is moving toward a structural change by acquiring Allianz's exit, which will lead to 100% ownership, though regulatory approvals are pending. (4 new trend across 4 signals)
“Now let me give a brief update on the status of the Allianz’s exit from the Joint Venture Agreement: BFS and the insurance companies are currently in the process of getting regulatory approvals from both CCI and IRDAI and there is no further update on the matter as we stand today.”
Bajaj Finance's AUM shows a consistent upward trajectory, growing from $16.9 billion in FY20 to $47.9 billion in FY25, maintaining a 5-year CAGR of 23%. (5 steady, 1 new trend, 2 accelerating across 8 signals)
“Assets under management 16,914 17,580 22,696 28,434 38,002 47,892 26% 23%”
See the full cited Future Growth analysis of Bajaj Finserv
What could break the thesis?
The risk remains active as the company is contesting a demand order of ₹ 191.44 crore (including penalty) related to incorrect availment of input tax credit (ITC).
“During the year ended 31 March 2025, BALIC has received a demand order amounting to ₹ 191.44 crore (including penalty of ₹ 143.58 crore) in respect of availment of certain input tax credit (‘ITC’) by BALIC.”
The risk is intensifying as loan provisioning for FY2025 rose to ₹ 7,966 crore from ₹ 4,631 crore in FY2024, driven by macro-level deterioration and increasing leverage on unsecured loans.
“The loan provisioning for the year was higher at ₹ 7,966 crore, up from ₹ 4,631 crore in FY2024 on account of model redevelopment, macro-level deterioration, increasing leverage on unsecured loans and increased AUM.”
As this was a one-time charge related to labor law changes, the risk is moving toward resolution as the impact is absorbed into the previous year's base, though it still affects year-on-year comparisons for the June 2025 quarter.
“financial results for the quarter ended 30 June 2025”
The risk is easing. Standalone surplus funds increased from ₹ 2,140 Crore in FY2025 to ₹ 2,604 Crore in Q1 FY2026, providing a better buffer for the holding company.
“Surplus Funds (Standalone) 2,604 2,610 0% 2,140”
The reported Combined Ratio (COR) rose to 104.8% from 101.6%, but this is largely attributed to accounting changes (1/n basis) rather than operational deterioration.
“The combined ratio, however, stood elevated due to the accounting anomalies, which I explained a little while earlier at about 104.8% in Quarter 4 versus 101.6% for the same period last year. However, if we exclude the impact of ‘1/n’ regulation, the combined ratio stood at 103.1%.”
See the full cited Risk analysis of Bajaj Finserv
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