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 (in Cr.) Income Statement Revenue Other Income Total Income Expenditure Interest PBDT Depreciation PBT Tax Net Profit Equity EPS CEPS OPM % NPM % 25.7 1.85 27.55 -8.2 -19.35 -0.59 18.76 -6.55 12.21 72.34 0.8 0.88 75.29 47.51 18.86 2.11 20.97 129.94 -150.91 -1.11 149.8 -8.91 140.89 72.34 9.7 9.81 800.16 747.03 24.26 2.49 26.75 -7.3 -19.45 -2.46 16.99 -5.84 11.15 72.34 0.8 0.94 80.17 45.96 47.66 0.86 48.52 -7.43 -41.09 -3.2 37.89 -14.01 23.88 72.34 1.6 1.87 86.21 50.1 29.03 0.79 29.82 -7.89 -21.93 -3.26 18.67 -6.25 12.42 72.34 0.9 1.08 75.54 42.78 119.81 6.25 126.06 107.32 -233.38 -10.03 223.35 -35.01 188.34 72.34 13 13.71 194.79 157.2 11Jun 11-Mar 10-Dec 10-Sep 10-Jun Mar-11 (Annual)

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.