- Bajaj Finserv shifts focus from market share to profitable growth across businesses
- Insurance moves from scale to profitability with strong combined ratios maintained
- Bajaj Life Insurance improves mix, boosting VNB margin and growth prospects
Bajaj Finserv is entering a phase where insurance profitability and newer financial-services businesses could become meaningful drivers of earnings, even as Bajaj Finance remains the group's core growth engine, according to Motilal Oswal.
The brokerage maintained its 'Buy' rating on Bajaj Finserv with a target price of Rs 2,490, following a management interaction in Singapore and Hong Kong. It believes the group's focus is increasingly shifting from chasing market share to generating higher-quality, more profitable growth across its businesses.
Insurance moves from scale to profitability
Motilal Oswal sees the insurance businesses as an important part of this transition. Bajaj General Insurance has continued to protect market share while maintaining one of the industry's strongest combined ratios, even as it has chosen to walk away from volumes where pricing is uneconomic.
Bajaj Life Insurance, meanwhile, has improved its product mix by reducing its dependence on lower-margin ULIPs and increasing its focus on protection, guaranteed-return products and annuities. The brokerage expects this shift to support VNB margin expansion alongside a re-acceleration in growth.
The newer businesses — health, markets and asset management — are also growing while narrowing losses. Motilal Oswal expects scale to progressively improve their profitability, potentially turning them into contributors to consolidated earnings.
The group is also expanding its financial-services footprint, with plans to enter wealth management and pensions. The Board has additionally approved a reinsurance business, initially focused on India and potentially expanding overseas once it achieves scale and suitable credit ratings.
Motilal Oswal said Bajaj Finserv's strong balance sheet gives it room to pursue such opportunities while Bajaj Finance continues to drive earnings growth.
The brokerage believes the combination of lending, higher-margin insurance growth and improving digital businesses should provide greater visibility on consolidated earnings and support long-term value creation.
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