Holding On

Bajaj Group Holding company sees promoter entities jacking up stakes

It’s been good going for 47-year-old Sanjiv Bajaj since he moved into the top job four years back at group holding company, Bajaj Holdings & Investment, which owns 39% in Bajaj Finserv and 31% in Bajaj Auto. While Rajiv is in charge of the auto business, the financial services business is run by Sanjiv. Since 2012, the holding company’s stock has tripled following a strong performance driven by a seven-fold rise in the stock price of Bajaj Finserv compared with a two-fold increase in the share price of Bajaj Auto.

After touching a 52-week high of Rs.2,235 in October, the stock has corrected 6% since November 8, following concerns over the impact of demonetisation on the core businesses. Bajaj Finserv not only houses the group’s NBFC arm, Bajaj Finance, but also the general insurance (Bajaj Allianz General Insurance) and life insurance (Bajaj Allianz Life Insurance) business of the group. Bajaj Finance, though, is expected to weather the demonetisation disruption better than its counterparts.

As much as 46% of its over Rs.52,000 crore loan book is exposed to consumer-facing sectors which should continue to see growth. The 7th Pay Commission hike payout and the phased implementation of the One Rank, One Pension scheme is expected to keep consumption steady. The auto business might struggle though as 30% of repayments in this segment are collected in cash. Sales in November were down 13% for the company. The promoter entities of the holding company have used the correction to firming up their stake in the holding company.

Over the past one month, nine different promoter entities in separate have bought 12.36 lakh shares. The latest transaction saw promoter entities, Bachhraj & Company and Jamnalal Sons, buying shares worth Rs.62 crore at Rs.2,080 a share. On November 24, Bachhraj & Company bought 1.92 lakh shares, while Jamnalal Sons picked up 1.04 lakh shares. Post transaction, Bachhraj & Company’s holding has inched up to 2.32%, while Jamnalal Sons holds 16.65% stake.

Currently, the promoter group holds 42% in the holding company. And given that promoter buying is a sign of confidence in the businesses that they run, the move could well settle some frayed nerves.