Bajaj Finserv vs. Bajaj Finance: Business Models

Introduction

What’s the real difference between Bajaj Finserv and Bajaj Finance? I mean, both are big names, both are from the same Bajaj family, and both deal with money, right? So, why do they exist as two separate companies? Are they just twins with different hairstyles, or is there more to the story? In this blog post we’ll dig deep into their business models.

An Indian stock investor who’s seen these names pop up everywhere, from loan ads to insurance calls, I’ve got some thoughts to share.

The Bajaj Family: One Tree, Two Branches

Bajaj Finserv and Bajaj Finance are part of the Bajaj Group.

This is a name we all know from bikes to now banking apps.

Bajaj Finserv is the parent company, the big boss, while Bajaj Finance is its star child. It is a subsidiary where Bajaj Finserv holds a 52.45% stake.

But this is the interesting part, even though they’re from the same family, their way of working is totally different. One’s a jack-of-all-trades, and the other’s a master of one.

Let’s understand this in more detail:

Bajaj Finserv: The All-Rounder Parent

Imagine Bajaj Finserv as that uncle in your family who has his fingers in every pie, real estate, stocks, farming, you name it.

Bajaj Finserv is a holding company, which means it doesn’t directly deal with you or me. Instead, it owns and oversees a bunch of businesses under the Bajaj umbrella. Its job? To strategize, invest, and make sure all its kids, like Bajaj Finance, Bajaj Allianz Life Insurance, and Bajaj Allianz General Insurance, are doing well.

So, what does Bajaj Finserv actually do?

It’s like the brain behind the operation. Through its subsidiaries, it offers everything from loans to insurance to even mutual funds.

• Want a personal loan? That’s via Bajaj Finance.
• Need health insurance? Bajaj Allianz has your back.
• Thinking of investing? They’ve got something brewing there too (under Bajaj Finance umbrella).

This diversification is their strength. If one sector, like lending, takes a hit (say, during a recession), the insurance or investment arms can still keep the money flowing.

But there is an issue. Bajaj Finserv itself doesn’t get its hands dirty with customers.

It’s registered as a Core Investment Company (CIC) with the RBI. What does it mean? It basically means it’s a non-banking financial company (NBFC) that focuses on holding stakes in other companies rather than lending directly.

Hence, Bajaj Finserv’s revenue comes from the profits of its subsidiaries. Bajaj Finance is the golden goose of Bajaj Finserv. It contributes a massive chunk to Bajaj Finserv’s revenue.

Bajaj Finance: The Lending Superstar

Ever bought a phone or fridge on EMI?

Chances are, Bajaj Finance was behind that easy “zero down payment” offer. Unlike its parent (Finserv), Bajaj Finance is all about action. It is a deposit-taking NBFC. It means, it can take money from people like us (fixed deposits, etc) and use it to give out loans.

Their business model is laser-focused, lending, lending, and more lending. Personal loans, home loans, business loans, car loans, you name it, they’ve got it.

They’re the kings of consumer financing in India. Walk into any electronics store, and you’ll see their banners promising “Buy now, pay later.”

Under the Bajaj Finance umbrella, they have two more subsidiaries:

• They’ve also got Bajaj Housing Finance for home loans and
• Bajaj Financial Securities for wealth management. But at its core, Bajaj Finance is about making borrowing simple and fast.

What’s their secret of Bajaj Finance’s business? Technology and scale.

They’ve built this massive network, lakhs of customers, thousands of touchpoints across cities and villages, and they use data like wizards. Ever wonder how they approve your loan in five minutes? That’s their tech at work, analyzing your credit score, income, and spending habits faster than you can say “EMI.” And because they focus on lending, their growth has been insane, over 20% annually in their loan book size for years.

Same Same, But Different: Where They Overlap and Split

If Bajaj Finserv owns Bajaj Finance, aren’t they basically the same?” Not quite.

Yes, they’re both in the finance game, whether it’s buying a TV or insuring our health. They share the same Bajaj DNA, tech-savvy, customer-focused, and hungry to grow. Both are regulated by the RBI, and both are betting big on India’s financial inclusion story, reaching those small towns where banks don’t always go.

But here’s where they part ways.

• Bajaj Finserv is the diversified company. It has spread its bets across lending, insurance, and more.
• Bajaj Finance? It’s the focused doer, doubling down on loans and EMI schemes.

Think of it like this, Bajaj Finserv is the chef cooking a full thali, dal, roti, sabzi, everything. While Bajaj Finance is perfecting just one dish, say, butter chicken, and serving it to millions.

To make the difference between Bajaj Finserv and Bajaj Finance crystal clear, I’ve put together a couple of tables for you. These tables break down the key differences and similarities between the two companies.

Table 1: Differences Between Bajaj Finserv and Bajaj Finance

Table 2: Similarities Between Bajaj Finserv and Bajaj Finance

See how they’re connected yet so different?

Bajaj Finserv is the big-picture player, while Bajaj Finance is the hands-on hustler. The above two tables should help you spot the points that make these two businesses both unique and different at the same time.

A Real-Life Example

Let me paint a picture.

Say you’re my friend Ravi from Pune. You want to buy a new bike, insure it, and maybe start stock investing for your future.

• You go to Bajaj Finance for an Auto loan to get the bike, quick, easy, done in a day.
• Then, Bajaj Allianz (under Bajaj Finserv) calls you up with a great insurance deal for that bike.
• Later, Bajaj Broking (Bajaj Finance Limited, operates its stockbroking services under the brand name “Bajaj Broking) let’s you trade in stocks. Mutual fund investing can also be done under the Bajaj Finserv’s hood (see here).

Which one is better?

Now, here’s the million-rupee question: which business model is better?

Both the stocks, Bajaj Finserv and Bajaj Finance are listed on NSE and BSE. As an investor, which one is a better long term bet?

Business Model: Honestly, it depends on what “better” means to you. Bajaj Finance’s focus makes it a growth machine, its profits and market cap often outshine its parent’s. It’s like that cousin who started a single shop and turned it into a chain in five years. Bajaj Finserv, though, plays the long game with its diversified approach. If lending slows down (due to interest rate hikes), insurance or investments can cushion the blow.

If my investment horizon is next 10-15 years, I’d bet Bajaj Finance might grow faster. India’s loan demand is skyrocketing, and they’re perfectly positioned.

But Bajaj Finserv isn’t far behind. If they snag a banking license someday (fingers crossed), their cost of funds could drop, and they’d give Bajaj Finance a real run for its money.

Conclusion

Bajaj Finserv and Bajaj Finance, two powerhouses with different styles.

One’s the big-picture thinker, juggling multiple businesses; the other’s the execution champ, dominating the lending space. As an Indian, I love how they’re both making finance less intimidating for us, whether it’s a loan for Diwali shopping or insurance for peace of mind.

Next time you see their ads, you’ll know exactly who’s who in the Bajaj family.

Got any thoughts? Drop them below in the comment section below.

Have a happy investing.