Bajaj Finserv Shares Dip Amid Volatility Despite Positive Outlook, Expansion Plans

Bajaj Finserv's share price continued to remain volatile on Wednesday, falling over 1% despite positive commentary by JM Financial over the weekend and expansion plans announced by leadership.

The shares closed 0.11% lower on Tuesday.

Chairman and Managing Director Sanjiv Bajaj had said Bajaj Finserv plans to expand its customer base to 250 million within the next four years.

The firm's new target comes on the heels of robust growth prospects of the South Asian economy, it told Reuters.

JM Financial's analysts met with the company's management and its key subsidiaries in Pune and highlighted several key takeaways from their meetings with Bajaj Finserv's insurance subsidiaries, Bajaj Allianz General Insurance Co. and Bajaj Allianz Life Insurance Co., as well as its platform businesses, Bajaj Finserv Health and Bajaj Finserv Direct.

"At the current market price, the implied holding company discount of 17% for Bajaj Finance is lower than the five-year average of 22%," the brokerage noted.

They have revised the target price for Bajaj Finserv to Rs 2,250, up from Rs 2,150, valuing the company using a sum-of-the-parts approach. This includes Rs 255 per share for the life insurance subsidiary, Rs 322 per share for the general insurance subsidiary, Rs 1,607 per share for Bajaj Finserv's 51.3% stake in Bajaj Finance, and Rs 66 for new initiatives.

The brokerage maintained a 'buy' rating on Bajaj Finserv. "The insurance subsidiaries do not see any material adverse impact from Allianz’s exit in terms of technology, underwriting, or reinsurance support. With the growth slowdown in the second half of FY25, Bajaj Allianz Life Insurance Company (BALIC) has revamped its product offerings and relooked at its cost structures to enhance VNB (Value of New Business) margins."

Bajaj Allianz General Insurance Co. remains focused on profitability and customer service. "With its strong solvency, the company will continue to look for profitable opportunities in tender-driven businesses," the brokerage added.

Both insurance subsidiaries are set to undergo a thorough rebranding exercise once Allianz SE is no longer a promoter, following the first stage of the transaction with the Bajaj group acquiring over 6% of the stake.