{"id":133472,"date":"2022-08-26T10:51:36","date_gmt":"2022-08-26T14:51:36","guid":{"rendered":"https:\/\/44.250.171.167\/?p=133472"},"modified":"2023-04-25T08:33:28","modified_gmt":"2023-04-25T12:33:28","slug":"rationale-behind-bajaj-finances-success","status":"publish","type":"post","link":"https:\/\/alphastreet.com\/india\/rationale-behind-bajaj-finances-success\/","title":{"rendered":"Rationale behind Bajaj Finance&#8217;s Success"},"content":{"rendered":"\n<p class=\"has-text-align-left\">Bajaj Finance has positioned itself as a cash cow with impressive moats. Bajaj Finance with an average RoE of 20% has seen its loan book rise at a CAGR of 35%, and its Profit After Tax has grown at a CAGR of 33% for over ten years. Despite such a meteoric rise in its numbers, Bajaj Finance shows no signs of slowing down as the company <a href=\"https:\/\/44.250.171.167\/bajaj-finance-limited-for-q1fy23-reports-a-159-growth-in-profits\/\" target=\"_blank\" rel=\"noreferrer noopener\">reported a 159% increase in profits YoY for Q1FY23<\/a>.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<h5 class=\"wp-block-heading\"><strong>Let\u2019s first understand the the firm\u2019s business model,<\/strong><br><\/h5>\n\n\n\n<p><br>As the country\u2019s largest consumer durables financier, it provides 0% EMI with a minimal processing fee to the consumer. When the consumer opts for the EMI, Bajaj Finance pays the full amount of the product to the manufacturer. Since, the manufacturer is getting the whole amount in one transaction, the manufacturer provides a 3-6% rebate to Bajaj Finance. Then, Bajaj Finance recovers the full amount of the product excluding the rebate from the consumer.<\/p>\n\n\n\n<p>In this deal, all three parties included in the transaction benefit from it. The consumer gets the comfort of paying monthly installment for the product at zero percent interest rate. The manufacturer receives the full amount of the product which increases the inventory turnover for them. Bajaj Finance earns through the processing fee as well as the rebate provided by the parties involved.<\/p>\n\n\n\n<p>These consumer durable transactions provide customer data to Bajaj Finance and after analyzing the repayment habits and customer background, Bajaj Finance pushes higher cost products to non-delinquent customers. Thus, creating a financing ecosystem with a trustworthy customer base.<\/p>\n\n\n\n<p>\u00a0<\/p>\n\n\n\n<h5 class=\"wp-block-heading\"><strong>Why cannot others enter Bajaj Finance\u2019s niche segment or replicate its success?<\/strong><\/h5>\n\n\n\n<p><\/p>\n\n\n\n<p><\/p>\n\n\n\n<p><\/p>\n\n\n\n<p>Bajaj Finance enjoys the privilege of borrowing vast sums of money at low rates due to the backing of the Bajaj Group. Along with that, Bajaj Finance has always focused on its Asset Liability Management. To elaborate further, Bajaj Finance borrows vast sums of money at low rates and lends the money to customers for a short period. This is one of the key factors attributing to the stability of the firm.\u00a0<\/p>\n\n\n\n<p>Bajaj Finance has already established itself as a financier with an extensive network and an efficient collection method that is difficult to replicate and even more difficult to snatch Bajaj Finance market share of around 70% in the consumer durables financing segment.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<h5 class=\"wp-block-heading\"><strong>What does the future hold?<\/strong><\/h5>\n\n\n\n<p><\/p>\n\n\n\n<p>Bajaj Finance is focused on creating a robust profitability engine on the backs of its digital infrastructure, i.e., its app.&nbsp; With more of the society shifting towards the digital world, the firm has deemed the utmost importance to possessing an online infrastructure. The app allows the firm to carry out more deals with a smaller cost of acquisition as the customer base expands. The app includes an investments and brokerage dimension that opens up new avenues of income for the firm. The app has garnered over 10 millions downloads on Google Play Store alone and presently is ranked 7th in free finance apps in India as per 26th August, 2022.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Bajaj Finance has positioned itself as a cash cow with impressive moats. Bajaj Finance with an average RoE of 20% has seen its loan book rise at a CAGR of 35%, and its Profit After Tax has grown at a CAGR of 33% for over ten years. Despite such a meteoric rise in its numbers, [&hellip;]<\/p>\n","protected":false},"author":1885,"featured_media":133481,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[1941,1,6352,6350],"tags":[10097,9708],"class_list":["post-133472","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stock-analysis","category-finance-stocks","category-research-summary","category-trending-stocks","tag-financial-service","tag-nbfc"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/alphastreet.com\/india\/wp-content\/uploads\/2022\/08\/iStock-458943223.jpg","jetpack_likes_enabled":false,"jetpack-related-posts":[{"id":165054,"url":"https:\/\/alphastreet.com\/india\/bajaj-finance-ltd-q2fy25-2-6-rise-in-profits-qoq\/","url_meta":{"origin":133472,"position":0},"title":"Bajaj Finance Ltd Q2FY25; 2.6% rise in Profits QoQ","author":"Divyansh_Kasana","date":"October 22, 2024","format":false,"excerpt":"Company Overview: Bajaj Finance Ltd, a subsidiary of Bajaj Finserv, is one of India\u2019s leading non-banking financial companies (NBFCs). It offers a diverse range of financial products, including consumer finance, SME lending, commercial lending, wealth management, and insurance services. With a widespread presence across India, Bajaj Finance caters to millions\u2026","rel":"","context":"In &quot;AlphaGraphs&quot;","block_context":{"text":"AlphaGraphs","link":"https:\/\/alphastreet.com\/india\/category\/infographics\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2024\/10\/e9f6b341-82d3-471f-8133-cfa4e5a3a263-1.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2024\/10\/e9f6b341-82d3-471f-8133-cfa4e5a3a263-1.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2024\/10\/e9f6b341-82d3-471f-8133-cfa4e5a3a263-1.png?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2024\/10\/e9f6b341-82d3-471f-8133-cfa4e5a3a263-1.png?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2024\/10\/e9f6b341-82d3-471f-8133-cfa4e5a3a263-1.png?resize=1050%2C600&ssl=1 3x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2024\/10\/e9f6b341-82d3-471f-8133-cfa4e5a3a263-1.png?resize=1400%2C800&ssl=1 4x"},"classes":[]},{"id":128368,"url":"https:\/\/alphastreet.com\/india\/bajaj-finance-limited-research-tear-sheet-q3-fy-2022\/","url_meta":{"origin":133472,"position":1},"title":"Bajaj Finance Limited Research Tear Sheet Q3 FY 2022","author":"sreerupa","date":"March 28, 2022","format":false,"excerpt":"Bajaj Finance is anon-banking financial company engaged \u00a0in providing two and three-wheeler finance. The company has its headquarter in Pune, India. The company has started its operation 11 years ago. Bajaj Auto Finance Ltd has launched its initial public issue of equity and the shares are traded on the\u00a0Bombay Stock\u2026","rel":"","context":"In &quot;Research Summary&quot;","block_context":{"text":"Research Summary","link":"https:\/\/alphastreet.com\/india\/category\/research-summary\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":179379,"url":"https:\/\/alphastreet.com\/india\/bajaj-finance-ltd-reports-23-consolidated-profit-growth-in-q3-fy26-results\/","url_meta":{"origin":133472,"position":2},"title":"Bajaj Finance Ltd Reports 23% Consolidated Profit Growth in Q3 FY26 Results","author":"Staff Correspondent","date":"February 3, 2026","format":false,"excerpt":"The company delivered strong AUM expansion of 22% and introduced its LRS 2026-30 strategic framework. Investors focus on balance sheet resilience following a \u20b91,406 crore accelerated ECL provision and a one-time charge related to New Labour Codes. Bajaj Finance Ltd (NSE: BAJFINANCE) reported its basic earnings per share at \u20b97.37\u2026","rel":"","context":"In &quot;Analysis&quot;","block_context":{"text":"Analysis","link":"https:\/\/alphastreet.com\/india\/category\/stock-analysis\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2021\/11\/Earnings-Coverage.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2021\/11\/Earnings-Coverage.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2021\/11\/Earnings-Coverage.jpg?resize=525%2C300&ssl=1 1.5x"},"classes":[]},{"id":125202,"url":"https:\/\/alphastreet.com\/india\/bajaj-finance-reports-q2-2022-results\/","url_meta":{"origin":133472,"position":3},"title":"Bajaj Finance reports Q2 2022 results","author":"Nishadkishore","date":"October 26, 2021","format":false,"excerpt":"Bajaj Finance (NSE: BJFN) reported its Second-quarter results for 2022 today. The company reported a net profit of \u00a0\u20b91,480.99 crores a rise of 53.48% compared to \u00a0\u20b9964.44 crores in the same quarter of the previous year. Net interest income (NII) for the quarter was up by 28% to \u20b95,335 crores\u2026","rel":"","context":"In &quot;Earnings&quot;","block_context":{"text":"Earnings","link":"https:\/\/alphastreet.com\/india\/category\/earnings\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":154631,"url":"https:\/\/alphastreet.com\/india\/the-master-of-lending-industry-ft-bajaj-finance\/","url_meta":{"origin":133472,"position":4},"title":"The Master of Lending Industry Ft Bajaj Finance","author":"Chirag Gupta","date":"September 14, 2023","format":false,"excerpt":"\u201cThe Omnichannel strategy enables customers to move between online and offline and vice-versa in a frictionless manner. It has been a huge structural shift for your Company, which is now reinventing the way it does everything. The Omnichannel strategy has six domains: (i) Geographic expansion, (ii) Bajaj Finserv app, (iii)\u2026","rel":"","context":"In &quot;Analysis&quot;","block_context":{"text":"Analysis","link":"https:\/\/alphastreet.com\/india\/category\/stock-analysis\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/02\/iStock-1311224404.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/02\/iStock-1311224404.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/02\/iStock-1311224404.jpg?resize=525%2C300&ssl=1 1.5x"},"classes":[]},{"id":144212,"url":"https:\/\/alphastreet.com\/india\/alphagraph-bajaj-finance-ltdnse-bajfinanceq4-fy23-results-outtotal-income-rises-27-yoy\/","url_meta":{"origin":133472,"position":5},"title":"Alphagraph | BAJAJ FINANCE LTD(NSE: BAJFINANCE)|Q4 FY23 Results Out|Total Income rises 27% YoY.","author":"Divyansh_Kasana","date":"April 26, 2023","format":false,"excerpt":"Bajaj Finance Ltd is a leading Indian non-banking financial company that provides a wide range of financial services, including consumer and commercial lending, wealth management, insurance, and more. With a strong customer base and innovative products, Bajaj Finance has become one of the most trusted and reputable financial institutions in\u2026","rel":"","context":"In &quot;Earnings&quot;","block_context":{"text":"Earnings","link":"https:\/\/alphastreet.com\/india\/category\/earnings\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/04\/9148a239-c130-405a-8eb1-184f19244a43.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/04\/9148a239-c130-405a-8eb1-184f19244a43.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/04\/9148a239-c130-405a-8eb1-184f19244a43.png?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/04\/9148a239-c130-405a-8eb1-184f19244a43.png?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/04\/9148a239-c130-405a-8eb1-184f19244a43.png?resize=1050%2C600&ssl=1 3x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/04\/9148a239-c130-405a-8eb1-184f19244a43.png?resize=1400%2C800&ssl=1 4x"},"classes":[]}],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/alphastreet.com\/india\/wp-json\/wp\/v2\/posts\/133472","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/alphastreet.com\/india\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/alphastreet.com\/india\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/alphastreet.com\/india\/wp-json\/wp\/v2\/users\/1885"}],"replies":[{"embeddable":true,"href":"https:\/\/alphastreet.com\/india\/wp-json\/wp\/v2\/comments?post=133472"}],"version-history":[{"count":0,"href":"https:\/\/alphastreet.com\/india\/wp-json\/wp\/v2\/posts\/133472\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/alphastreet.com\/india\/wp-json\/wp\/v2\/media\/133481"}],"wp:attachment":[{"href":"https:\/\/alphastreet.com\/india\/wp-json\/wp\/v2\/media?parent=133472"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/alphastreet.com\/india\/wp-json\/wp\/v2\/categories?post=133472"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/alphastreet.com\/india\/wp-json\/wp\/v2\/tags?post=133472"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}