Bajaj Group Created Big Wealth in 10 Yrs for its Shareholders

The last leg of Rahul Bajaj’s reins at the Bajaj Group was the most rewarding for its shareholders.

If Bajaj Finance offered small ticket innovative loans for aspirational Indians, Bajaj Auto road Hamara Bajaj on two wheels in Africa, Latin America and the emerging market beating the Chinese, earning the distinction of a true global Indian brands. In the process, both added significant value for shareholders.

The group’s market capitalisation has grown more than 35% annually to Rs8.5 lakh crore in the last decade, or about two times quicker than India’s equity market value. Rahul Bajaj, who passed away on Saturday, had stepped down from executive roles in the first half last decade, but was chairman of Bajaj Auto until the beginning of the current fiscal year. Since then, he was chairman-emeritus.

The biggest value creator among Bajaj companies has been Bajaj Finance, which delivered a return of 80% annually in the last 10 years, becoming the country’s ninth-largest company by market capitalisation. In 2010, Bajaj Finance had a market capitalisation of just over Rs1,100 crore, which grew to about Rs4.23 lakh crore today. It was followed by Bajaj Finserv, which posted a compounded annual growth rate of 48%.

The Bajaj Group has a holding company, Bajaj Holding & Investment, which owns a 39% stake in Bajaj Finserv and 33.4% in Bajaj Auto. In addition, Bajaj Finserv holds 52.6% of Bajaj Finance, and having 74% stake in life and general insurance companies.

Bajaj Finance had assets under management of Rs1.52 lakh crore at the end of FY21, while profit grew 47% annually to Rs4,420 crores between FY21. The shares of Bajaj Auto, on the other hand, grew at a CAGR of 13% in the last decade. Bajaj Auto has been able to hedge the volatility in the domestic two-wheeler market by expanding its wings to oversee market with a presence in 79 countries.

The company is either a market leader or figure among the top two or three players in its major export market – underlining the penetration the brand has made in Africa and Latin America.

With an installed capacity of 6.3 million units, Bajaj Auto is the third- largest motorcycle manufacture in the world.

The share of exports in its total revenue rose to 47% at $1.6 billion in FY21 from 28% in FY10. It exported nearly 2 million units in the last fiscal.

The rising exports share helped the company’s revenue grow 9.1% on a CAGR basis in the past decade, outpacing market leader Hero Moto-Corp that grew 6.9% according to data from Capitaline.

Furthermore, the company is the market leader in the superior-margin three-wheeler segment. This helped it enjoy a 4-5 percentage- point higher margin compared with mass-market bike makers such as Hero MotoCorp and TVS.

During Covid times, the export business ensured decent utilization of the facilities with a healthy order book, when the country was pushed into a hard lockdown.

Much to the delight of Rahul Bajaj, Bajaj Auto brought back the famous Chetak in an electric avatar, which is expected to be its cornerstone in EV transaction.

The company has started raping up the production of electric two-wheelers. It currently produces 2,000 units of electric scooter Chetak and has an order for around 10,000 units.

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