80% of Bajaj group’s valuation comes from financial services

MUMBAI: Rahul Bajaj’s business legacy are group companies with a market cap of over Rs 8. 4 lakh crore with around 80% of the group’s valuation coming from the financial services twins –

Bajaj Finance

and

Bajaj Finserv

.

Almost every industrial group in the country has an inhouse financial services company. More so for companies in the auto industries considering that they have a captive business to finance. However, in all business groups, financial services are usually an adjunct to the manufacturing business.

Much of the valuation of the financial services business comes from the lending business. What makes

Bajaj

FinServ a superstar among lenders is its success in small-ticket lending building a personal finance loan book bigger than most banks. Use of techand efficient underwriting process has ensured it can lend instantly without defaults.

What enabled Bajaj’s financial services business to come to its own, was the decision to demerge businesses in 2008. The

Bajaj Group

is a rare instance where a division of businesses among family members has led to a multiplication of wealth. In 2006, when Rahul Bajaj began the process of unlocking value at Bajaj Auto one of the outcomes was the demerger of the financial services business from the two-wheeler business and the separation of responsibilities between his two sons Sanjiv and Rajiv.

The demerger resulted in the splitting of the business group between two brothers with each having a market cap of around Rs 8,000 crore.