It’s hard to ignore that amid all the brouhaha around banks and the ugly bad loan mess that the sector finds itself in, non-banking financial companies (NBFCs) have managed to steal the show. While the slowdown in India Inc came to haunt the bigger banks, forcing them to cut down on corporate lending and take stock of their decimated books, the nimble-footed NBFCs kept muscling their way, especially on the retail lending side.
In fact, if one were to take stock of both the sectors’ performance on the bourses, the difference is telling. While leading NBFC stocks have delivered an average 33% CAGR return for investors over the past five years, bank stocks have paled in comparison, generating a return of 16% over the same period. And the one NBFC that came in from the cold and went on to create a vast amount of wealth for investors is Bajaj Finance. Currently the second-largest NBFC after HDFC in terms of market cap, the stock has generated 74% CAGR return over the past half decade.
What was largely a captive financing arm for Bajaj Auto’s two- and three-wheelers is today the country's biggest consumer financier, also boasting of a robust SME and commercial lending book. The credit of this remarkable transformation goes to Sanjiv Bajaj, who since 2008 has painstakingly built the business and set up an equally talented team not just at the NBFC, but also in the general and life insurance ventures that the group entered into with Allianz of Germany. Today, all the three promising ventures are part of Bajaj Finserv.
What makes Finserv’s story a compelling one is the manner in which Bajaj and his team managed to stay prudent even as they made the most of every growth opportunity that came their way. Bajaj’s obsession with fiscal discipline ensured that profitability was never sacrificed at the altar of growth. Read about how Finserv managed its phenomenal rise and what’s on Bajaj’s mind in our cover story,see The Alchemist of Finance.
Among other stories in the issue, we take a look at how MTR Foods under its Norwegian parent is now eyeing a slice of the breakfast market, read Setting Your Tastebuds on Fire. And in investing, we have an interesting mid-cap IT stock, Cyient, which through a well-crafted growth strategy has created a niche for itself in the engineering space with a marquee set of clients, see Engineered for Success.