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Breath to your Investment

Tarun Aggarwals Sanjivani Stock


E-Mail id- sanjivanistock@gmail.com
Sep 07, 2011

CMP-Rs.550/Target Price Rs.1000/(Time Frame 2 yrs)


Research report on Bajaj Finserv Ltd.
(BSE code-532978 & NSE code -BAJAJFINSV)

A company where growth and returns go hand in hand


Background & Business of the company:
As we all know that the financial services and wind energy businesses were
transferred to Bajaj FinServ Limited (BFS) as part of the recently concluded
demerger of Bajaj Auto Limited. The demerger is effective from the Appointed
Date
i.e.
closing
hours
of
business
on
March
31,
2007.
Bajaj FinServ will strive to be one of the top financial services businesses in India
focused on delivering superior customer experience through competitive
products and class leading services while providing consistent and superior
returns to our shareholders and maintaining the high levels of integrity of Bajaj.
Business area of the company:

The Company is currently engaged in life

insurance; general insurance and consumer finance businesses and has plans to
expand its business by offering a wide array of financial products and services in
India. Apart from financial services, BFS is also active in wind-energy generation.
BFS is engaged in life and general insurance businesses through its joint ventures
with Allianz SE namely Bajaj Allianz Life Insurance Company Limited and Bajaj
Allianz General Insurance Limited. Both these companies have established
themselves as industry leaders by being number two among the private players in
their respective businesses. The wind-energy project of BFSL operates 138
windmills in Maharashtra with an installed capacity of 65.2 MW.

Industry Prospects:Financial banking is the science of managing money and other assets pertaining
to a specific business. We all know that banks offer basic loans, deposits and
financial advice, but they also facilitate transactions on sophisticated financial
instruments such as private equity, bonds and mutual funds. Most top performing
companies typically view careers in Banking as the pinnacle of achievement, and
sectors such as treasury, equity trading, investment banking and private banking
are viewed as the most lucrative jobs for new graduates.
In addition to traditional banks, other financial institutions such as credit unions,
trust companies, mortgage loan companies, insurance companies, brokerage
firms and asset management firms also offer a host of financial advice. Hence,
when viewing the opportunities in the sector, one must also carefully consider
these other specialized financial institutions

Key management personnel:


Mr. Sanjiv Bajaj
Managing
Director

Mr. Sanjiv Bajaj, who took charge as the Managing Director


of the company on 20 February 2008, is a Mechanical
Engineer from Pune University. He obtained a Masters
Degree in Manufacturing Systems from the University of
Warwick and an MBA degree from Harvard Business School.

Mr. Sanjiv Bajaj joined Bajaj Auto Ltd as an Officer on Special


Duty in 1994, took over as the General Manager (CF) in 1997,
Vice President (Finance) in April 2001, Executive Director in
April 2004 and continues as Executive Director till date.

Kevin P D'Sa
CFO
&
President
(Business
Development)

Mr. Kevin Dsa began his career with Bajaj Auto Ltd in
September 1978 and is presently its Vice President (Finance).
After acquiring a Bachelors degree in Commerce, he
completed his CA in 1978 and ICWA in 1981.
He is working as CFO & President (Business Development) in
the company with effect from 20 February 2008.

Mr
Ranjit
Gupta
President
(Insurance)

Mr. Ranjit Gupta started in Bajaj Auto Limited as General


Manager (Co-ordination) in 1988, and moved on to become
Vice President (Materials ) in 1995 and Vice President
(Insurance)
in
2001.

Sonal R Tiwari
Company
Secretary

Ms. Sonal R Tiwari is the Company Secretary of the company


with effect from 20 February 2008. She is ACS, post graduate
in Commerce and graduate in Law.

Financials:
The company has been given out good numbers for the past few quarters &
reporting a sustainable growth and Profits compared to corresponding quarters of
the previous years. For the full year, the company has reported topline of around
Rs.265 crores(120cr sales + 145 cr other income) and a Net Profit of around
Rs.188 crores resulting in an EPS of around Rs.13.02 (FY 2010-11) The promoters
hold roughly 60% of the Equity. The company is TOTALLY DEBT FREE & regular
dividend Payee Company.
HIGHLIGHTS Q1 FY12 v/s Q1 FY11
Quarterly
Trends
11Jun

(in Cr.)

11-Mar

10-Dec

10-Sep

10-Jun

Mar-11
(Annual)

Income Statement
Revenue

25.7

18.86

24.26

47.66

29.03

119.81

Other Income

1.85

2.11

2.49

0.86

0.79

6.25

Total Income

27.55

20.97

26.75

48.52

29.82

126.06

-8.2

129.94

-7.3

-7.43

-7.89

107.32

Expenditure
Interest

--

--

--

--

--

--

PBDT

19.35

150.91

19.45

41.09

21.93

233.38

Depreciation

-0.59

-1.11

-2.46

-3.2

-3.26

-10.03

PBT

18.76

149.8

16.99

37.89

18.67

223.35

Tax

-6.55

-8.91

-5.84

-14.01

-6.25

-35.01

Net Profit

12.21

140.89

11.15

23.88

12.42

188.34

72.34

72.34

72.34

72.34

72.34

72.34

0.8

9.7

0.8

1.6

0.9

13

Equity
EPS
CEPS

0.88

9.81

0.94

1.87

1.08

13.71

OPM %

75.29

800.16

80.17

86.21

75.54

194.79
157.2

NPM %

47.51

747.03

45.96

50.1

42.78

Conclusion:
We believe that good times have just started for Bajaj Finserv Ltd. the
company over the past few years done lot of hard work to make a special image
in the field of financial / insurance industry. We believe the next 3-5 years could
be the period where growth happens exponentially for the company leading to
multiplication in its turnover.
We feel it is only a matter of time that more Institutional Investors, both domestic
and foreign get interested in the stock. However, as always they would start
buying after there is a substantial news flow from the company by which time the
market cap of the company would already have gone up substantially from the
current levels. Institutional Investors being custodians of public money like to play
it safe and invest only after they get fully convinced about the visibility of future
earnings. Risk Takers however can accumulate the stock at the current levels and
hold on/ add more in case of a decline in the price.

We believe that the stock is a potential multibagger.

Tarun Aggarwal is an equity analyst and investment consultant based at New Delhi,
INDIA. At the time of writing this article, he, his firm and dependent family members
donot have a position in the stocks mentioned above. The author, his firm or any of his
dependent family members may make purchases or sale of the securities mentioned in
the report while the report is in circulation. The author invites readers to send him email
and welcomes comments, feedback & queries at sanjivanistock@gmail.com
This report has been prepared solely for information purposes and the
information contained herein may not be deemed to be an investment advice.
Such information is impersonal and not tailored to the investment needs of any
specific person. The information contained herein is not a complete analysis of
every material fact representing any company, industry or security. The views
expressed may change. While the information contained herein has been
obtained from sources believed to be reliable, no responsibility (or liability) is
accepted for the accuracy of its contents. Investors are advised to satisfy
themselves before making any investments and should consult with and rely
upon their own advisors whether and how to use such information in making any
investment decision. Neither the author nor his firm accepts any liability arising
out of use of the above information/ article.

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