Is Bajaj Holding Share Price Attractive To Buy?

Key takeaways:
-Bajaj Holdings & Investment Ltd. (NSE BAJAJHLDNG) is a non-banking financial company.
-Member of the list of the most solvent companies in India
-Average net profit`s growth rate for 5 years is 37%

The current market price of one BAJAJHLDNG stock is 8745 INR as of 01 July 2024. Taking into account the company`s net profit of 72 billion rupees (approximately $870 million) Bajaj Holdings has a P/E ratio of 13. This meaning corresponds to the median one which means that the financial company is fairly priced at the moment (3% above fair value to be exact).
The share price at which the company’s P/E ratio will be the lowest in the last 5 years is 6165 INR per stock (P/E equals 9.44) and it would be a reasonable price for long-term investors trying to avoid extra risk.

Company overview

Bajaj Holdings & Investment Ltd (formerly known as Bajaj Auto Ltd) is an India-based company. The company is acting as a primary investment company and focusing on new business opportunities. Bajaj Holdings holds strategic stakes of 33.43% in Bajaj Auto Ltd. (BAL) 39.29% in Bajaj Finserv Ltd. (BFS) and 51% in Maharashtra Scooters Ltd. (MSL). BHIL is essentially an investment company. Its focus is on earning income through dividends interest and profits on investments held. It is largely dependent on the equity and debt markets for its income.
Bajaj Holdings & Investment Ltd. is a part of a large group of companies of the Bajaj family. The company attracted our attention by being included in the list of the top 10 solvent companies in India. You can find all the names in our stock picks.

Basic data:
Industry: Financial Services
IPO date: 03 November 1994
Market Cap: $11.3B (large-cap)
Total Assets: 651B INR according to Q4 FY 2024
Dividend Yield: 1.5%

Excellent solvency and solid sustainability

As mentioned above, the solvency ratios are excellent, which is very important for a financial company. Bajaj Holdings is an almost debt-free business with current assets 30 times greater than current liabilities.

In addition to a high-quality balance sheet, the company is distinguished by significant levels of sustainability in its growth. Judge for yourself: the net income`s growth rate by last quarter’s results is 65%, and the average meaning for 2 and 5 years was 34% and 27%, respectively.

To assess sustainability, we introduced an indicator called the Stability Ratio, where we divide the average earnings growth rate by the standard deviation. In this case, we have a ratio above 1, which is an excellent result for a mature company.

Eyestock proprietary rating for BAJAJHLDNG share

Having collected data on indicators of solvency and stability of development, we added 5 more financial indicators to calculate the Eyestock rating of investment attractiveness. This is the composite quant score for assessing the company`s financials and it helps to determine whether it is worth investing in the company’s shares. Once it is above 100% (kind of threshold) the company is outstanding.

BAJAJHLDNG stock has a rating of 108%. The chart above clearly shows the strengths of the business, as well as the insufficiently high level of efficiency indicators (ROE and ROIC). If the company can improve these numbers, it could be on the list of favorite investments for the long term in India.

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