“A COMPRENHSIVE FINANCIAL ANALYSIS OF BAJAJ FINANCE LTD”

BY
KOMAL VAGHELA – 92401423077
DR. HIREN PAREKH

A Thesis Submitted to
Marwadi University in Partial Fulfillment of the Requirements for the MBA in Faculty of
Business Management

JUNE - 2025

MARWADI UNIVERSITY
Rajkot-Morbi Road, At & Po. Gauridad,
Rajkot-360003, Gujarat, India.

1
STUDENT DECLARATION

2
COMPANY CERTIFICATE

3
UNIVERSITY CERTIFICATE

4
PREFACE

5
ACKNOWLEDGEMENT

6
ABSTRACT

7
 Summer Internship Project is Industry defined study

TABLE OF CONTENTS

SR.NO PARTICULARS PAGE NO.

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1. PART – A
CHAPTER 1 - GENERAL INFORMATION
1.1 Background of the Industry 12
1.2 Growth and Evolution of the Industry 13
1.3 Key Indicators and Future Trends of the Industry 14-15
1.4 Industry's Analytical Data: World market, Country (India) market and 16-17
State (Gujarat) market
1.5 PESTEL Analysis – Financial Service Industry 18
CHAPTER 2 - BACKGROUND OF THE COMPANY
2.1 Company Details 20
2.1.1 Background of Bajaj Finance 20
2.1.2 Promoter Information 20

2.1.3 Legacy & Group 21

2.1.4 Historical Timeline of Bajaj Group 21-22

2.1.5 Company History and Profile 22

2.1.6 Strategic Positioning and Regulatory Standing 22

2.1.7 Core Business Focus 23

2.1.8 Vision and Mission 23-24

2.2 Organization Structure 25

2.2.1 Bajaj Group Corporate Structure 26-27
2.2.2 Core Companies 28-29
2.3 Products / Services 30-33
2.4 Financial Analysis 34-59
2.5 Future Outlook of the Company (Projections) 60

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2.6 SWOT Analysis of the Company 61
CHAPTER 3 - COMPETITORS’ ANALYSIS
3.1 Porter’s Five Force Model 63
2. PART - B
CHAPTER – 4 - PROBLEM IDENTIFICATION
4.1 Introduction of the study 65-77
4.1.1 Importance of Financial Analysis 78
4.1.2 Objectives of Financial Analysis in This Project 78
4.1.3 Limitations of Financial Analysis 78
4.1.4 Tools and Techniques Used 79
4.1.5 Applicability to Bajaj Finance and the NBFC Sector 79
4.2 Rationale of the Study 80
4.3 Research Problem 81
4.4 Identification of Research Gap 81-82
4.5 Literature Review 82-84
4.6 Research Objectives 85
3. PART - C
CHAPTER 5 - DIAGONSIS OF THE PROBLEM/SITUATION
5.1 Finding Alternatives of the situation 87
5.2 Suggestive Measures to Overcome the Problem 88
5.3 Key Findings 88
5.4 Suggestions 89
5.5 Limitations of the Study 89
5.6 Contribution of the Study 89
Bibliography & References 90
Annexures 91-96

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 LIST OF FIGURES AND GRAPH
GRAPH NO. PARTICULARS PAGE NO.
1 Bajaj Group Family 25
2 Bajaj Finance Ltd Leadership Team 26
3 Bajaj Group Structure 27
4 Graph of Net Profit Margin 44
5 Graph of Operating Margin 45
6 Graph of Return on Assets 46
7 Graph of Return on Equity 47
8 Graph of Current Ratio 48
9 Graph of Debt to Equity Ratio 49
10 Graph of Proprietary Ratio 50
11 Graph of Interest Coverage Ratio 51
12 Graph of Capital Adequacy Ratio 52
13 Graph of Asset Turnover Ratio 53
14 Graph of Cost to Income Ratio 54
15 Graph of Operating Expense to AUM 55
16 Graph of Net Interest Margin 56
17 Graph of Loan to Deposit Ratio 57
18 Graph of Net NPA to Net Advance Ratio 58
19 Graph of DU Pont ROE 59
20 Vertical Analysis 66
21 Horizontal Analysis 67
22 Leverage Analysis 68
23 Growth Rate 69
24 Profitability Analysis 70

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 25 Liquidity Analysis 71
26 Efficiency Analysis 72
27 Cash Flow 73
28 Rates of Return 74
29 Valuation Analysis 75
30 Scenario & Sensitivity Analysis 76
31 Variance Analysis 77

LIST OF TABLES

TABLE NO. PARTICULARS PAGE NO.

1 Table Showing Analytical Data 16
2 Pestle Analysis 18
3 Timeline of Bajaj Group 21-22
4 Key Leadership Roles of Bajaj Finance Ltd 27
5 Holding Corporation/Core Companies 29
6 Table showing Balance sheet 34-35
7 Table showing Profit and Loss 37-38
8 Table Showing Cash flow 40-42
9 Table showing Net Profit Ratio of Bajaj Finance Ltd 44
10 Table showing Operating Profit Ratio of Bajaj Finance Ltd 45
11 Table showing Return on Asset of Bajaj Finance Ltd 46
12 Table showing Return on Equity of Bajaj Finance Ltd 47
13 Table showing Current Ratio of Bajaj Finance Ltd 48
14 Table showing Debt to Equity Ratio of Bajaj Finance Ltd 49
15 Table showing Proprietary Ratio of Bajaj Finance Ltd 50
16 Table showing Interest Coverage Ratio of Bajaj Finance Ltd 51
17 Table showing Capital Adequacy Ratio of Bajaj Finance Ltd 52
18 Table showing Asset Turnover Ratio of Bajaj Finance Ltd 53
19 Table showing Cost to Income Ratio of Bajaj Finance Ltd 54
20 Table showing Operating Expense to AUM Ratio of Bajaj 55

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 Finance Ltd
21 Table showing Net Interest Margin of Bajaj Finance Ltd 56
22 Table showing Loan to Deposit Ratio of Bajaj Finance Ltd 57
23 Table showing Net NPA to Net Advance of Bajaj Finance Ltd 58
24 Table showing DU Pont ROE of Bajaj Finance Ltd 59
25 SWOT Analysis 61
26 Porter’s Five Force Model 63

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 Chapter 1
General Information

13
1.1 Background of the Industry

The financial services sector is pivotal in fostering a country's economic growth by facilitating
access to credit, managing wealth, transferring risk, and providing payment systems. In India,
this sector encompasses banks, insurance firms, mutual funds, non-banking financial companies
(NBFCs), fintech enterprises, and various other financial intermediaries. It plays a vital role in
contributing to GDP expansion and job creation while serving as the foundation for both public
and private investments.

Within this extensive sector, Non-Banking Financial Companies (NBFCs) have emerged as
essential contributors in providing credit to demographics that are frequently overlooked by
conventional banks. This includes small enterprises, first-time borrowers, self-employed
individuals, and customers in rural areas. In contrast to banks, NBFCs offer greater flexibility in
their product offerings and outreach, rendering them highly competitive in the consumer finance
market.

In the past decade, the Indian financial services sector has undergone a significant
transformation, propelled by regulatory changes, the adoption of digital technologies, and
evolving customer expectations. NBFCs such as Bajaj Finance Ltd have been instrumental in this
evolution by leveraging technology to streamline the borrowing process, enhance service
delivery, and expand their presence in Tier 2 and Tier 3 cities.

As of 2024, the financial services sector in India continues to experience steady growth,
bolstered by robust government initiatives such as Digital India, financial inclusion programs,
and partnerships with fintech companies. The future of this sector will be influenced by digital
transformation, more stringent regulations, personalized customer experiences, and the
increasing importance of green and sustainable finance.

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1.2 Growth and Evolution of the Industry

India’s financial services sector has undergone substantial changes over the past few decades.
Historically, it was primarily dominated by public sector banks and insurance firms; however, it
has progressively opened its doors to private entities, international institutions, fintech firms, and
non-banking financial companies (NBFCs). This diversification has fostered increased
competition, enhanced access to financial resources, and broadened the array of financial
products available to both individuals and enterprises.

The most significant transformation has been observed in the NBFC sector, which has
transitioned from small lending entities focused on vehicle and equipment financing to
comprehensive financial service providers. Currently, prominent NBFCs such as Bajaj Finance
Ltd offer an extensive range of products, including personal loans, consumer durable loans, gold
loans, SME financing, and digital credit solutions. This evolution has been facilitated by robust
risk management practices, a deeper understanding of niche markets, and the swift adoption of
technology.

The IL&FS crisis in 2018 represented a pivotal moment in the sector’s progression. It prompted
stricter regulations and a more prudent lending strategy. In response, the Reserve Bank of India
(RBI) implemented frameworks such as the Scale-Based Regulation (SBR) to closely monitor
large NBFCs and align them with bank-like risk and compliance standards. Bajaj Finance,
categorized under the “Upper Layer” in this framework, has responded by strengthening its
governance, liquidity reserves, and risk management protocols.

In recent years, the emergence of mobile banking, e-KYC, and digital payment systems has
expedited the transition towards paperless and expedited financial services. NBFCs have adopted
this digital shift to reduce operational expenses and access new customer demographics. The

15
industry continues to progress with a strong emphasis on sustainable finance, AI-driven lending,
and promoting financial inclusion.

1.3 Key Indicators and Future Trends of the Industry

Key Industry Indicators

The financial services sector in India, which includes NBFCs, has shown robust growth across
various indicators. Below are the current key metrics:

1. Size and Reach of NBFC Sector

As of 2023, there are over 9,500 registered NBFCs in India, with approximately 400 classified as
systemically important. NBFCs account for nearly 25% of the total credit in the economy.

2. Credit Growth Rate

The NBFC sector experienced a year-on-year growth rate of 15–18% in total loan disbursements
during the fiscal year 2022–23, as reported by CRISIL.

3. Asset Quality
On average, the Gross Non-Performing Asset (NPA) ratios for NBFCs have remained below 3%
in FY23, indicating enhanced credit assessment and recovery mechanisms following the IL&FS
crisis.

4. Capital Adequacy
Most prominent NBFCs, particularly those in the Upper Layer, sustain a Capital to Risk-
Weighted Assets Ratio (CRAR) exceeding 20%, significantly surpassing the minimum
requirement set by the Reserve Bank of India (RBI).

5. Digital Adoption

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Approximately 65–70% of loan applications within NBFCs are now processed via digital
platforms. The adoption of paperless onboarding, electronic Know Your Customer (e-KYC), and
mobile loan servicing is becoming increasingly commonplace.

6. Diversification of Offerings
NBFCs are now providing a broader array of products — ranging from gold loans to credit cards
and even wealth management services — allowing them to effectively compete with banks and
fintech companies.

Future Trends
Looking forward, the financial services and NBFC sector is anticipated to develop further in the
following manners:

1. Increased Digitalization
The industry will persist in investing in AI, automation, and cloud-based loan systems to lower
costs and enhance speed.

2. Sustainable & Green Finance

NBFCs are projected to assume a more significant role in financing electric vehicles, solar
installations, and ESG-compliant infrastructure.

3. Stronger Regulatory Oversight

The RBI’s Scale-Based Regulation (SBR) will necessitate that NBFCs in the Upper Layer
uphold bank-like standards concerning governance, risk, and transparency.

4. Rise of Fintech Collaboration

Numerous NBFCs will collaborate with fintech companies for co-lending, underwriting, and the
distribution of digital products.

5. Focus on Rural & MSME Lending

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There will be ongoing growth in financing small enterprises and underserved communities,
particularly in Tier 2/3 cities.

6. Consolidation in the Sector

Smaller NBFCs may merge or be acquired due to increasing compliance costs, while larger
entities will prevail with technological, branding, and funding advantages.
1.4 Industry's Analytical Data: World market, Country (India) market and
State (Gujarat) market in Tabular Form:-
Region Market Size / Key Players / Major Trends / Future Outlook
Reach Institutions Drivers
World $50.1 trillion in US: Lending Club, Digitization: mobile Continued digital-
Market assets (2022) SoFi lending, AI-driven first expansion
credit
48% of global UK: Revolut, Monzo Blockchain and ESG investment
financial assets cloud tech adoption rise
held by non- Global: SoftBank-
bank backed NBFCs, Rise of green Global regulation
institutions fintech startups finance (EV, tightening post-
renewable lending) COVID
Country 9,500+ NBFCs Bajaj Finance RBI SBR framework Digital scale-up
Market (2023)
(India) 25% of total Shriram Finance Digital onboarding, Compliance with
credit in India AI models tighter norms
Mahindra Finance
15–18% loan Fintech-NBFC Growth in
growth (FY23) Fintechs: Navi, collaboration underserved
KreditBee markets
State High demand in Bajaj Finance Credit demand in Govt-led
Market Ahmedabad, (regional presence) gold, SME, vehicle MSME/startup
(Gujarat) Surat, Rajkot sectors growth
Local NBFCs,

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 microfinance firms
MSME-driven Digital awareness in Infrastructure-
financial needs Digital agents & Tier 2/3 based lending
merchant partners
Expanding rural Sector demand from
NBFC outreach textile, logistics
Table - 1
World Market – Analysis

The global financial services sector is exceptionally developed, with non-bank organizations
managing almost half of the world’s financial assets (approximately $50.1 trillion).
Prominent players such as Lending Club and Revolt are spearheading innovation through digital-
first lending, AI-driven risk assessment models, and the integration of block chain technology.
A notable trend is the transition towards green finance, as global institutions align with
sustainability objectives and prioritize ESG investments.
The future perspective includes increased digital adoption, lending driven by ESG
considerations, and heightened regulatory oversight in the non-banking sector.

India Market – Analysis

India’s NBFC sector constitutes a substantial part of the nation’s credit framework, comprising
over 9,500 entities and experiencing rapid growth in Tier 2 and Tier 3 markets.
Leading firms such as Bajaj Finance and Mahindra Finance are utilizing technology to enhance
paperless and AI-driven lending solutions.
Regulatory initiatives like the RBI’s Scale-Based Regulation have bolstered transparency and
governance standards for larger NBFCs.
The sector is anticipated to keep growing through digital advancements, co-lending partnerships
with fintech companies, and greater penetration into rural markets.

Gujarat State Market – Analysis

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Gujarat offers robust lending prospects due to its MSME-dominant economy and industrial hubs
in cities like Surat and Rajkot.
NBFCs are actively addressing local credit needs in areas such as gold loans, vehicle financing,
and SME working capital.

1.5 PESTEL Analysis – Financial Service Industry

Political • The central government and regulatory bodies such as the RBI and
SEBI play a significant role in shaping financial policies.
• Political stability fosters long-term financial reforms, including
banking privatization and fintech regulations.
• Government initiatives, such as Jan Dhan Yojana and PMJJBY,
enhance financial inclusion and extend outreach.
Economic • Economic indicators, including GDP, inflation, and interest rates,
have a direct impact on the demand for loans, investments, and
insurance.
• During periods of economic growth, credit expansion and capital
markets flourish.
• Economic downturns lead to a decrease in credit demand and an
increase in the risk of defaults.
Social • The rise in financial literacy and the penetration of smartphones
facilitate the adoption of digital finance.
• A youthful population and an expanding middle class are driving
consumption and the demand for financial products.
• Growing awareness regarding savings, insurance, and retirement
planning is altering financial behaviors.
Technological • The rapid growth of fintech is revolutionizing service delivery
through UPI, digital wallets, and AI-driven loan processing.
• Blockchain technology and automation are enhancing transparency

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 and efficiency.
• Cybersecurity and data privacy continue to be critical operational
priorities.
Environmental • Financial institutions are progressively providing green finance
products, such as EV loans and renewable energy bonds.
• Climate risk is increasingly being incorporated into investment and
lending decisions.
• There is a rising regulatory push for ESG (Environmental, Social,
and Governance) disclosures.
Legal • The financial services sector operates under a complex framework of
regulatory laws, including the Banking Regulation Act and SEBI
rules.
• Legislation concerning digital lending, customer protection, and data
privacy is evolving.
• Strengthened IBC and NPA regulations enhance recovery and
accountability within the sector.

Table - 2

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 Chapter 2

Background of the Company

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2.1 Company Details

2.1.1 Background of Bajaj Finance

Bajaj Finance Ltd. (‘BFL’, ‘Bajaj Finance’, or ‘the Company’), a subsidiary of Bajaj Finserv
Ltd., is a deposit-taking Non-Banking Financial Company (NBFC-D) registered with the
Reserve Bank of India (RBI) and is classified as an NBFC-Investment and Credit Company
(NBFC-ICC). BFL is engaged in the business of lending and acceptance of deposits. It has a
diversified lending portfolio across retail, SMEs, and commercial customers with significant
presence in both urban and rural India. It accepts public and corporate deposits and offers a

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variety of financial services products to its customers. BFL, a thirty-five-year-old enterprise, has
now become a leading player in the NBFC sector in India and on a consolidated basis, it has a
franchise of 69.14 million customers. BFL has the highest domestic credit rating of AAA/Stable
for long-term borrowing, A1+ for short-term borrowing, and CRISIL AAA/Stable & [ICRA]
AAA (Stable) for its FD program. It has a long-term issuer credit rating of BB+/Positive and a
short-term rating of B by S&P Global ratings.

2.1.2 Promoter Information

Bajaj Finance Ltd is a subsidiary of Bajaj Finserv Ltd, which acts as the promoter and holding
company. Bajaj Finserv holds a controlling stake in Bajaj Finance and provides strategic
guidance and support. Bajaj Finserv itself is part of the Bajaj Group and is a major financial
services conglomerate with operations in lending, insurance, and wealth management.

2.1.3 Legacy & Group

Bajaj Finance Ltd is a part of the prestigious Bajaj Group, which was founded in 1926 by the
renowned Gandhian industrialist, Late Shri Jamnalal Bajaj. Shri Jamnalal Bajaj was a visionary
and a prominent figure in the Indian freedom struggle. His core belief that 'the common good is
more important than individual gain' became the foundation for the group’s ethical business
practices.

The Bajaj Group, built on strong Gandhian values, is one of India’s oldest and most respected
conglomerates. Today, it comprises more than 40 companies and operates in sectors like
automobiles, finance, home appliances, lighting, steel, insurance, and energy. Its flagship
company, Bajaj Auto, is one of the largest two- and three-wheeler manufacturers in the world.
Other notable companies include Bajaj Finserv, Bajaj Electricals, Bajaj Consumer Care, Bajaj
Energy, and Bajaj Holdings & Investment.

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2.1.4 Historical Timeline of Bajaj Group
Year Company/ Factory

1905 Cotton ginning factory (Bachhraj Bajaj)

1915 Bachhraj Jamnalal opens an office in Bombay

1927 Bachhraj & Co Pvt Ltd established

1930 Deccan Ayurvedasharam Pharmacy Limited launched

1931 Jamnalal enters the sugar industry

Between 1931 with 1937, several companies were amalgamated under Bajaj.

1938 Jamnalal Sons Pvt Ltd and Radio Lamp Works Limited established
1951 Collaborations with Hind Lamps, Philips, General Electric Co., and Associated
Electrical Industries
1962 Comprehensive Travel Service launched
1967 Sharda Sugar and Industries Ltd merged with Bajaj Hindustan Sugar Ltd
1975 Maharashtra Scooters Ltd becomes a Public Limited company listed on BSE & NSE

1987 Bajaj Auto Finance Limited incorporated (focused on two-wheeler financing)

2000 Launch of Bajaj Allianz Life (Fact Sheet)

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2007 Starlite Lighting partners with Bajaj Electricals

2008 Shishir Bajaj and his son Kushagra depart from the Bajaj family
2010 Bajaj Auto Finance Ltd renamed to Bajaj Finance Ltd, now a subsidiary of Bajaj
Finserv Ltd
2018 Bajaj Electricals acquires Nirlep Appliances; Mukund Sumi Special Steel Ltd
formed; Bajaj Group becomes India’s fourth largest conglomerate

2019 Maharashtra Scooters Limited reaffirms presence under Bajaj Group

2022 Bajaj Finance and BHFL classified as Upper Layer NBFCs under RBI’s Scale-Based
Regulation
2023 Bajaj Finance crosses 83.64 million customers, 4,145 branches, and ₹330,615 Cr in
AUM

2024 Raised ₹8,800 Cr via QIP; Maintains industry-best NPAs (Gross 0.85%, Net 0.37%)

Table - 3

2.1.5 Company History and Profile

Bajaj Finance Ltd (BFL) was incorporated in 1987 as Bajaj Auto Finance Ltd, primarily focusing
on two-wheeler financing. Over the years, it transformed into one of India’s largest and most
diversified Non-Banking Financial Companies (NBFCs). In 2010, it was renamed Bajaj Finance
Ltd to reflect its expanding product range and customer base.

The company has consistently adapted to market needs by offering a wide variety of financial
products, including consumer finance, SME and commercial lending, rural lending, gold loans,
deposits, and services through digital platforms. BFL is present in 4,145 locations across India,
including 2,576 rural and semi-urban centers. It operates through a multi-product, multi-channel
approach that allows it to serve a vast and growing customer base.

26
2.1.6 Strategic Positioning and Regulatory Standing

Bajaj Finance Ltd continues to strengthen its position through technological innovation,
customer-centric product development, and wide geographic coverage. In September 2022, the
Reserve Bank of India (RBI) classified Bajaj Finance and its housing subsidiary BHFL as Upper
Layer NBFCs under the Scale-Based Regulatory (SBR) framework. This classification requires
enhanced regulatory oversight and reflects the company’s systemic importance in the Indian
financial ecosystem.

Despite increased regulatory requirements, BFL remains well-capitalized, resilient, and agile. Its
focus on digital transformation, prudent risk management, and responsible lending continues to
drive sustainable and profitable growth.

2.1.7 Core Business Focus

Bajaj Finance Ltd operates across ten broad verticals to meet varied customer needs:
1. Consumer Lending (Sales Finance)
2. Personal Loans
3. SME Lending
4. Auto Financing
5. Rural Lending
6. Gold Loans
7. Commercial Lending
8. Loan against Securities
9. Deposits
10. Partnerships and Services

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The Company’s strategic model focuses on acquiring millions of customers and cross-selling
multiple financial services to retain and grow its customer base.

2.1.8 Vision and Mission

Vision: To be the most trusted and innovative financial services company.

Mission: To deliver superior and convenient financial services through innovation, technology,
and excellence.

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2.2 Organization Structure

Bajaj Finance Ltd, a subsidiary of Bajaj Finserv Ltd, plays a crucial role within the Bajaj Group
— one of India’s most esteemed business conglomerates established by Jamnalal Bajaj in 1926.
The Group’s enterprises are founded on Gandhian principles of trusteeship and integrity, which
are evident in its current governance and operational framework. The robust group structure and
leadership guarantee compliance with regulatory standards and promote sustainable growth.

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 Figure 1: Bajaj Group Family

2.2.1 Bajaj Group Corporate Structure:

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 Figure 2: Bajaj Group Structure

Figure 3: Bajaj Finance Ltd Leadership Team

2.2.2 Core Companies:

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Bajaj Auto Ltd.
Bajaj Auto Ltd. serves as the flagship entity of the Bajaj Group, which ranks among the top 10
corporate conglomerates in India. It stands as the largest exporter of two- and three-wheeled
vehicles in the country. The Bajaj brand is well-recognized in regions such as the Americas,
Africa, the Middle East, and Southeast Asia. Under the guidance of the late Mr. Rahul Bajaj, the
former chairman of the group, Bajaj Auto broadened its product offerings and significantly
increased its sales.

Bajaj Allianz General Insurance

Bajaj Allianz General Insurance represents a joint venture between Bajaj Finserv Limited and
Allianz SE, merging global expertise with robust financial resources. The company provides a
wide array of solutions in General and Health Insurance, as well as Risk Management services.
With a substantial presence in nearly 1,400 cities and towns throughout India, Bajaj Allianz
leverages advanced technology to engage with customers and ensure prompt service.
Bajaj Allianz Life Insurance Co. Ltd.
Bajaj Allianz Life Insurance is another partnership between Bajaj Finserv and Allianz SE. Its
primary objective is to satisfy customers by delivering innovative insurance and financial
products. The company is recognized for customizing solutions to meet customer requirements
and assisting them with cutting-edge technology.

Bajaj Electricals Ltd.

With a history that extends over 80 years, Bajaj Electricals Ltd. (BEL) is one of the foremost
Consumer Products and EPC (Engineering, Procurement, and Construction) firms in India. Its
product offerings encompass appliances, lighting, and power transmission solutions. The
company caters to customers through an extensive network of more than 200,000 retail outlets,
20 branches, and numerous distributors.
Bajaj Finance Ltd.
Bajaj Finance Ltd. stands as a prominent non-banking financial company (NBFC) characterized
by a diversified business model. Its primary operations encompass consumer finance, SME
lending, and commercial loans. The product offerings include loans for two- and three-wheelers,

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consumer durable loans, personal and salary loans, as well as co-branded credit cards, all
facilitated through innovative cross-selling strategies.

Bajaj Finserv Ltd.

Bajaj Finserv Ltd. serves as the parent entity overseeing the financial services of the Bajaj
Group. It manages various businesses in lending, insurance, asset management, and additional
sectors. The company emphasizes operational efficiency, sustainable growth, and the provision
of value to all stakeholders.

Bajaj Holdings and Investment Ltd.

Bajaj Holdings and Investment Ltd. operates as a non-banking financial company primarily
functioning as an investment firm. Its objective is to achieve long-term capital appreciation.
Additionally, the company offers substantial operational, managerial, and financial support to
other entities within the group.

Mukand Ltd.
Established in 1937 in Mumbai, Mukand Ltd. is a multinational corporation engaged in the
metals and industrial machinery sector. It ranks among India’s foremost producers of high-
quality stainless steel and serves as a significant supplier of alloy steel to the automotive and auto
parts industries.

Hercules Hoists Ltd.

Hercules Hoists Ltd., a member of the Bajaj Group since 1962, was founded with technical
assistance from Heinrich De Fries GmbH, Germany, to produce material-handling equipment.
Over the last sixty years, its brand has gained recognition as a reliable source for durable
material handling solutions, establishing itself as a market leader in this field.
Hind Musafir Agency Ltd.

Hind Musafir Agency Ltd. (HMA) is a full-service travel agency certified by IATA, operating
under the Bajaj Group and boasting over 50 years of industry experience. The company is

33
acknowledged by the Department of Tourism and is affiliated with organizations such as TAAI
and PATA. HMA employs advanced IT systems, including AMADEUS, for its online booking
services. Founded in 1952 by Shri Kamalanayan Bajaj, the company was established on the
foundation of "trust" and continues to deliver reliable travel services.

Holdings Corporation Bajaj Holding and Investment

Limited
Automobiles Bajaj Auto Ltd
Non-banking Financial Company Bajaj FinServ Ltd & Bajaj Finance
Ltd
Insurance Bajaj Allianz General insurance Bajaj
Allianz Life insurance
Steel Mukund Ltd
Consumer Appliances Ltd Bajaj Electricals Ltd
Travel & Tours Hind musafir Agency ltd (HMA)
Material handling Hercules hoists Ltd
Charity / Foundation Jamnalal Bajaj foundation Hamaara
Sapna other trusts
Table - 4

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2.3 Products / Services

Consumer Finance

Durable Finance: A finance option for purchase of household items like washing machines,
refrigerators, air-conditioner, LED TVs, microwaves, furniture etc consumers can avail up to
Rs.4 lakh with the Bajaj Finserv EMI Network. Consumers can get up to 100% funding of
purchase at zero or low interest rates and Pick a convenient tenor and repay in easy EMIs.

Lifestyle Finance: Financing options through easy EMI loans offered to purchase home
appliances, personal appliances, groceries, fashion and accessories, travel, healthcare fitness and
health that give hassle-free access to affordable luxury, with payment convenience at every
avenue.

Digital Product Finance: Customers can buy products affordably on the Bajaj Finserv EMI
Network. With more than 80,000 stores customers can just walk in partner stores, select the
electronics, mobile, appliance or any other product, talk to the representative, and convert the
cost of the purchase into easy EMIs.

EMI Card: EMI Network Card comes with a pre-approved loan of up to Rs.4 lakh that
customers can use across any of Bajaj Finserv’s 60,000+ partner stores in more than 1,300 cities.
It comes with features like flexible tenors ranging from 3 – 24 months, nil foreclosure charges,
and one time document submission to allow shopping favourite products on EMI from top e-
commerce platforms.

2 & 3 Wheeler Finance: Offering two and three wheeler finance at Bajaj showrooms and other
authorized service stations across the country BFL offers customers vehicle loans for the
purchase of the favourite Bajaj Motorcycles among all variants namely Pulsar, Avenger,
Discover, Platina and the latest V besides KTM motorcycles. It also provides easy and attractive
financing schemes for the wide range of Bajaj RE three wheelers.

Personal Loan: Borrow up to Rs 25 lakh collateral free Personal Loan by just meeting simple
eligibility criteria and submitting basic documents. Customers can avail money with an online

35
personal loan application approved instantly while providing them with flexible repayment
tenors ranging from 12 months to 60 months.

Loan against FD: A secured loan offered against the FDs, it comes at low interest rates, quick
loan processing, flexible repayment options and minimal documentation with no foreclosure or
part-prepayment charges.

Extended warranty: Protect products from manufacturing defects with an IRDAI approved
programme that provides up to 3 years additional warranty offered in partnership with Bajaj
Allianz General Insurance Co. Ltd. (BAGIC)

Gold Loan: A loan offered against the gold customers own, gold loan helps customers meet their
financial needs with a high loan limit of Rs. 2 crs, at attractive interest rates, with flexible
repayment option and no charges on part-prepayment or foreclosure to make the loan affordable.

Home Loan: Home Loans up to Rs. 3.5 crore at lowest interest rate in India with added features
like additional top-up loan and doorstep service. Bajaj Home Loan comes with Easy Balance
Transfer Facility, minimal documentation and faster processing. Flexible tenor and no charges on
part-prepayment or foreclosure and PMAY assistance makes the loan affordable.

Retail EMI: Retail EMI option offers easy financing on electronics & home appliances like
smartphone, tv, washing machine, air conditioner, laptop, air cooler etc, furniture, lifecare
service, groceries, clothes, accessories and more. No hidden charges, simply divide the cost of
the purchase into easy instalments. This can be availed through across the retail network of Bajaj
Finance Ltd.

Retailer Finance: An exclusive finance option for the retail partners, it will help them avail
finance for acquiring inventory from the manufacturers. The retailers are assigned a pre-
approved credit line which they can use any time they want and are the first time ever that non-
collateral based financing option has been introduced for the retailers.

E-commerce: : Bajaj Finserv has partnered with the leading e-commerce platforms to offer all
products on EMIs. EMI Network Card allows purchasing products and get benefits such as loans

36
with zero down payment, convenient repayment tenor of up to 12 months, hassle-free service,
and more. With the No Cost EMI facility, one can simply divide the cost of your product into
easy monthly instalments and pay nothing extra.

Co-branded Credit Card: Bajaj Finserv RBL Bank SuperCard is the first co-branded credit
card that offers unique combination of deals across 80,000 merchants. No Cost EMI financing
across various consumer durables and other products, cashback, and special amenities such as
airport lounge access and fuel surcharge waivers. The SuperCard supports urgent needs by
offering borrowing options via personal loans and ATM withdrawals.

Co-branded Wallet: : BFL in collaboration with MobiKwik offers Bajaj Finserv Wallet that is
accepted at over 2 million stores across the Mobikwik merchant network. Bajaj Finserv Wallet
can be used as a debit and credit facility wallet. It can be also used to pay the bills, book tickets,
and collect payments easily and seamlessly, at the touch of a button.

Commercial Lending

Vendor Financing: With Vendor Financing consumer can pay vendors on time and ensure a
smooth flow of business operations. It offers vendors with a high loan amount up to 30 lakh,
Flexi loan facility along with faster process and quick disbursal.

Large Value Lease Rental Discounting: Lease Rental Discounting is a loan that is offered
against rental receipts. It can be availed by tenants against leased contracts with funding between
Rs.10 Crore to Rs.50 crore and comes with tenure of 11 years along with foreclosure or part-
prepayment facility.

Loans against Securities: Loan Against Securities is a hassle-free way to get funds without
liquidating the assets. With loan up to Rs 10 crore and Nil Part Payment/Foreclosure Charges it
is supported by dedicated relationship manager who is available 24/7 to assist customers with all
the requests.

Financial Institutions Lending

37
Light Engineering Finance: A personal financing option that provides customers access to a
large amount of funds. The loan offers funds up to ₹3.5 crore to meet personal expenses like
wedding, home renovation, vacation and education costs or to consolidate existing debts into one
easy loan.

Corporate Finance

Warehouse Financing: : Loans for warehouses where SME owners can fund warehouse
operations by stocking the right amount of inventory or open a new one to cater to new markets.
It comes with affordable financing up to Rs 30 lakh and hassle-free unsecured financing.

Investment

Fixed Deposit: One of the safest investment options, fixed deposit enables to take control of
investments with flexibility and offers guaranteed returns. Investors can easily choose a tenor
between 12 months and 60 months, as per their financial needs. Attractive FD interest rates of up
to 8.70% and higher interest rates for senior citizens helps to multiply their savings easily with
minimum deposit of Rs. 25,000.

Mutual Funds: Bajaj Finance Mutual Funds comes with Low risk, high returns and
diversification, making investment profitable. It comes with small investment option, which is
professionally managed keeping complete transparency and interactivity. It has low transaction
costs and investment that can be liquefied at any time, unless they have specified lock-in period.

SME Finance

Home Loan: Home loan up to Rs. 3.5 crore at lowest interest rate with added features like
additional top-up loan and doorstep service. It comes with additional benefits like lower interest
rate of just 6.93%* under Pradhan Mantri Awas Yojna (PMAY), easy balance transfer facility,
top-up loan, property dossier, flexible tenor, customised insurance schemes and minimal
documentation.

38
Loan against Property: It enables one to finance child’s education, managing wedding
expenses, expanding business, or even handling unforeseen medical expenses with customised
property loan to salaried and self-employed individuals at affordable interest rates.

Gold Loan: Gold Loans to salaried or self-employed individuals and also to firms and
companies. The loan promises to be reliable, hassle-free, with excellent financial service and the
sanction process is simple and instantaneous.

Business Loan: With business loan SME owner can use funds to invest in infrastructure, expand
operations, upgrade to the latest plant and machinery, maintain inventory, or to increase working
capital. It comes with features and benefit like affordable large capital, flexi loan facility, no
collateral and can be availed for a sum up to Rs 30 lakh for short term needs.

Loan Against Shares: The loan offers quick secured financing, of up to Rs. 10 crore against
Securities, mutual funds, insurance, or bonds, stocks, shares (equity shares & demat shares and
more) for all the financial needs for diversifying financial needs. It comes with benefits like
dedicated 24/7 relationship manger, nil part payment/foreclosure charges and wide list of
approved securities.

Professional Loan: A loan to professionals like Doctors, Chartered Accountants and engineers
to cater the unique need of every professional. It comes with flexi loan facility, quick processing
and hassle-free application. The loan ranges from Rs 2 crore to 25 lakh depending up the
profession of the applicant.

Working Capital Loans: A Working Capital Loan is a loan to help businesses fund their day-to-
day or short-term operations like procure raw materials, purchase inventory, pay for overhead
costs, finance blocked payments from debtors, supplier payment in advance and to maintain a
healthy level of cash. Unsecured working capital loan can be availed up to Rs 30 lakh with
benefits like hassle-free approval with 24 hours, flexible withdrawals and repayments.

Developer Finance: Developer Finance is a mortgage variant offering financial assistance to

developers for meeting their project construction costs and corporate term loans for their
working capital requirements. It comes with features and benefits like Loan amount up to Rs.

39
150 crore, more than 100 developers in the portfolio and experienced, dedicated local
relationship manager in every location to offer customized solutions.

Used Car Finance: Fund pre-owned car purchase in a smart, quick and hassle-free way with
Used Car Finance. It offers asset-based loan up to 90% of the car valuation at an attractive rate of
interest rates. It comes with doorstep facility with instant approval and end-to-end car care
services facility.

40
2.4 Financial AnanlysisTable: 5 Balance SheetSource: For the For the
https://www.bseindia.com/stock-share-price/bajaj- year ended year ended
finance-ltd/bajfinance/500034/financials-annual- 31st March 31st March
reports/Particulars Note No. 2024 2023

ASSETS

FINANCIAL ASSETS

Cash and cash equivalents 4,034.51 1,550.75

Bank balances other than cash and cash equivalents 6,589.50 2,753.77

Derivative financial instruments 27.84 148.88

Trade receivables 1,733.49 1,299.72

Loans 326,293.32 242,268.93

Investments 30,880.65 22,751.84

Other financial assets 1,431.88 819.64

Financial Assets (A) 370,991.19 271,593.53

Non-financial assets

Current tax assets (net) 290.92 181.43

Deferred tax assets (net) 1,017.43 937.09

Property, plant and equipment 2,358.32 1,676.57

Capital work-in-progress 25.35 14.60

Intangible assets under development 18.11 65.24

Goodwill 3.27 3.27

Other intangible assets 888.31 627.78

Other non-financial assets 148.72 129.16

Non-Financial Assets (B) 4,750.43 3,635.14

Total Assets (A+B) 375,741.62 275,228.67

41
LIABILITIES AND EQUITY

Liabilities
Financial liabilities
Derivative financial instruments 2.12 4.01
Payables
Trade payables
Total outstanding dues of micro enterprises and small
enterprises 0.73 1.86
Total outstanding dues of creditors other than micro
enterprises and small enterprises 2,063.31 1,450.26
Other payables
Total outstanding dues of micro enterprises and small
enterprises - 0.65
Total outstanding dues of creditors other than micro
enterprises and small enterprises 764.58 638.67
Debt securities 117,999.54 86,845.24
Borrowings (other than debt securities) 111,617.47 81,549.40
Deposits 60,150.92 44,665.56
Subordinated debts 3,577.90 3,630.29
Other financial liabilities 1,844.39 1,309.29

Financial Liabilities (A) 298,020.96 220,095.23

Non-financial liabilities
Current tax liabilities (net) 108.64 139.21
Provisions 421.89 270.44
Other non-financial liabilities 494.78 351.81

Non-Financial Liabilities (B) 1,025.31 761.46

Total Liabilities (A+B) 299,046.27 220,856.69

Equity
Equity share capital 123.60 120.89

42
 Other equity 76,571.75 54,251.09

76,695.35 54,371.98

Total liabilities and equity 375,741.62 275,228.67

Financial Analysis Based on Balance Sheet

Total Assets: Bajaj Finance Ltd. experienced a substantial increase in total assets, rising from
₹275,228.67 crore in FY 2023 to ₹375,741.62 crore in FY 2024. This growth signifies a strong business
expansion and asset accumulation.

Financial Assets: The financial assets saw an increase from ₹271,593.53 crore to ₹370,991.19 crore. This
reflects a significant emphasis on financial operations and the expansion of the portfolio, particularly in
lending and investments.

Cash and Bank Balances: Cash and cash equivalents surged from ₹1,550.75 crore to ₹4,034.51 crore,
with bank balances also on the rise. This indicates enhanced liquidity and improved availability of short-
term funds compared to the previous year.

Loans: The loan portfolio grew from ₹242,268.93 crore to ₹326,293.32 crore, demonstrating aggressive
lending practices and an expanding customer base, which is a favorable indicator of business growth.

Investments: Investments rose from ₹22,751.84 crore to ₹30,880.65 crore, indicating that the company is
directing more resources towards income-generating financial instruments.

Non-Financial Assets: Non-financial assets increased from ₹3,635.14 crore to ₹4,750.43 crore, primarily
driven by advancements in property, plant, and equipment. This suggests ongoing infrastructure
development and a strengthening of the asset base.

Financial Liabilities: Total financial liabilities increased from ₹220,095.23 crore to ₹298,020.96 crore.
While this supports asset growth, it also points to higher levels of borrowing and the necessity for
effective debt management.

43
Debt Securities and Borrowings: Debt securities experienced a significant rise from ₹86,845.24 crore to
₹117,999.54 crore, while borrowings escalated from ₹81,549.40 crore to ₹111,617.47 crore, indicating a
greater dependence on external funding sources.

Equity Position: Equity improved from ₹54,371.98 crore in FY 2023 to ₹76,695.35 crore in FY 2024,
reflecting enhanced shareholder value through retained earnings and potentially new equity contributions.

Overall Financial Health: The growth in both assets and liabilities indicates robust business expansion.
Nevertheless, the significant increase in borrowings implies a necessity for ongoing attention to capital
adequacy, liquidity, and repayment strategies to ensure financial stability.

For the
For the year year ended
Note ended 31st 31st March
Table: 6 Profit & Loss Statement Particulars No. March 2024 2023

Revenue from operations

Interest income 48,306.60 35,550.19

Fees and commission income 5,267.17 4,342.85

Net gain on fair value changes 308.29 334.32

Sale of services 49.97 38.18

Income on derecognised (assigned) loans 13.33 23.17

Other operating income 1,024.13 1,108.67

Total revenue from operations 54,969.49 41,397.38

Other income 13.02 8.31
Total income 54,982.51 41,405.69

44
Expenses
Finance costs 18,724.69 12,559.89

Fees and commission expense 1,931.50 1,891.47

Impairment on financial instruments 4,630.70 3,189.65

Employee benefits expense 6,396.01 5,059.13

Depreciation and amortisation expenses 683.32 485.38

Other expenses 3,314.36 2,693.98

Total expenses 35,680.58 25,879.50
Share of profit/(loss) from associate 7.64 1.67
Profit before tax 19,309.57 15,527.86

Tax expense
Current tax 4,957.72 3,998.18

Deferred tax (credit)/charge -99.32 21.99

Total tax expense 4,858.40 4,020.17

Profit after tax 14,451.17 11,507.69

Other comprehensive income (OCI)

Items that will not be reclassified to profit or loss:

Re-measurement losses on defined benefit plans -61.65 -27.71

Tax impact on above 15.52 6.98

Net remeasurement gains/(losses) on defined benefit plans -
Share of associate -0.1 -0.01
Net other adjustments - Share of associates 0.01 -
Changes in fair value of fair value through OCI (FVOCI)
equity instruments 151.62 -13.99

Tax impact on above -29.82 3.73

Items that will be reclassified to profit or loss in subsequent
periods:

Changes in fair value of FVOCI debt securities 39.45 -11.27

Tax impact on above -9.93 2.84

Cash flow hedge reserve -20.8 22.17

45
 Tax impact on above 5.24 -5.58
Total other comprehensive income for the year (net of tax) 89.54 -22.84
Total comprehensive income for the year 14,540.71 11,484.85
Earnings per share:
(Nominal value per share Rs. 2)
Basic (Rs.) 236.89 190.53

Diluted (Rs.) 235.98 189.57

46
Financial Analysis Based on Profit & Loss Statement

Total Revenue Growth: Total income rose from ₹41,405.69 crore in FY 2023 to ₹54,982.51
crore in FY 2024, demonstrating a robust growth of approximately 33%. This indicates a healthy
expansion of the business and an increasing customer base.

Interest Income: Interest income grew from ₹35,550.19 crore to ₹48,306.60 crore, signifying
that core lending activities remain the primary source of revenue. This growth corresponds with
the rise in total loans reflected in the Balance Sheet.

Fee and Commission Income: Fee income also increased from ₹4,342.85 crore to ₹5,267.17
crore, indicating enhanced non-interest income from services such as processing fees, late fees,
and others.

Total Expenses: Total expenses surged from ₹25,879.50 crore to ₹35,680.58 crore. This rise is
anticipated in conjunction with revenue growth but underscores the necessity for expense
management moving forward.

Finance Costs: Finance costs rose significantly from ₹12,559.89 crore to ₹18,724.69 crore,
indicating an increase in interest burden due to higher borrowings, which may slightly affect
profitability if not carefully monitored.

Employee Expenses: Employee benefit expenses increased from ₹5,059.13 crore to ₹6,396.01
crore, reflecting the company's investment in human resources to facilitate growth and
operations.

Impairment and Provisioning: Impairment on financial instruments rose to ₹4,630.70 crore from
₹3,189.65 crore, potentially due to cautious provisioning following the pandemic or shifts in
asset quality expectations.

47
Profit Before Tax (PBT): PBT increased from ₹15,527.86 crore to ₹19,309.57 crore — a growth
of approximately 24%, indicating strong pre-tax profitability despite rising costs.

Profit After Tax (PAT): PAT grew from ₹11,507.69 crore to ₹14,451.17 crore, reflecting a solid
net profit performance. This aligns with the Net Profit Margin ratio calculated earlier.

Earnings Per Share (EPS): EPS (Basic) rose from ₹190.53 to ₹236.89, indicating enhanced
profitability per share.

Table: 7 Cash Flow Statement

For the year For the year

ended 31st ended 31st
Particulars March 2024 March 2023

(I) Operating activities

Profit before tax 19,309.57 15,527.86

Adjustments for:

Interest income -48,306.60 -35,548.57

Depreciation and amortisation expenses 683.32 485.38

Impairment on financial instruments 4,630.70 3,189.65

Net loss on disposal of property, plant and equipment and other
intangible assets 12.54 13.33

Finance costs 18,724.69 12,559.89

Share based payment expenses 268.23 224.41

Net gain on fair value changes -308.29 -334.32

Service fees for management of assigned portfolio of loans -49.97 -38.18

48
Income on derecognised (assigned) loans -13.33 -23.17

Dividend income (Rs. 30,225, Previous year Rs. 31,125)

Share of (profit)/loss from associate -7.64 -1.67

-5,056.78 -3,945.39

Cash inflow from interest on loans 45,853.53 35,032.84

Cash inflow from service asset 89.61 106.59

Cash outflow towards finance cost -17,044.04 -13,107.38

Cash generated from operation before working capital changes 23,842.32 18,086.66
Working capital changes
(Increase)/decrease in bank balances other than cash and cash
equivalents -3,589.13 -2,413.16
(Increase)/decrease in trade receivables -457.54 -93.43

(Increase)/decrease in loans -88,187.48 -54,412.09

(Increase)/decrease in other financial assets -306.33 87.83

(Increase)/decrease in other non-financial assets -33.6 47.17

(Increase)/decrease in derivative financial instruments (net) -24.86 8.75

Increase/(decrease) in trade payables 611.91 292.93

Increase/(decrease) in other payables 125.26 285.69

Increase/(decrease) in other financial liabilities 125.33 75.3

Increase/(decrease) in provisions 89.81 75.83

Increase/(decrease) in other non-financial liabilities 142.16 -181.09

-91,504.47 -56,226.27

Income tax paid (net of refunds) -5,097.99 -3,972.18

Net cash used in operating activities (I) -72,760.14 -42,111.79

(II) Investing activities
Purchase of property, plant and equipment and capital work-in-
progress -603.62 -485.88
Purchase of other intangible assets and intangible assets under
development -434.16 -392.44
Sale of property, plant and equipment and other intangible assets 38.89 19.81

49
Purchase of investments measured at amortised cost -6,429.43 -148.72

Proceeds from liquidation of investments measured at amortised cost 6,201.62 5,107.14

Purchase of investments classified as FVOCI -23,310.68 -21,272.49

Proceeds from liquidation of investments classified as FVOCI 15,231.80 10,900.36

Purchase of investments classified as FVTPL -111,040.08 -296,988.97

Proceeds from liquidation of investments classified as FVTPL 113,012.92 292,353.31

Purchase of equity investments designated under FVOCI -514.96 -

Dividend income (Rs. 30,225, Previous year Rs. 31,125)

Interest received on investments 943.99 606.71
Investment in associates -267.47 -92.74

Net cash used in investing activities (II) -7,171.18 -10,393.91

(III) Financing activities

Issue of equity share capital (including securities premium) 9,067.17 158.12

Issue of share warrants 297.21 -

Share issue expenses -34.55 -0.12

Dividends paid -1,814.58 -1,206.86

Payment of lease liability -174 -143.45

Deposits received (net) 14,759.93 13,556.92

Short term borrowing availed (net) 22,023.50 7,923.66

Long term borrowing availed 72,666.31 66,860.38

Long term borrowing repaid -34,375.91 -36,473.64

Net cash generated from financing activities (III) 82,415.08 50,675.01

Net increase/(decrease) in cash and cash equivalents (I+II+III) 2,483.76 -1,830.69

Cash and cash equivalents at the beginning of the year 1,550.75 3,381.44

Cash and cash equivalents at the end of the year 4,034.51 1,550.75

50
Financial Analysis Based on Cash Flow Statement

🔹 Operating Activities
The cash generated prior to changes in working capital increased from ₹18,086.66 crore in FY
2023 to ₹23,842.32 crore in FY 2024, indicating robust operational performance.
Nevertheless, the net cash utilized in operating activities deteriorated markedly from
₹(42,111.79) crore to ₹(72,760.14) crore in FY 2024, attributed to significant changes in
working capital, mainly driven by:
A substantial rise in loans amounting to ₹ (88,187.48) crore
Increased interest outflows and expansion of the loan portfolio
The income tax paid also escalated from ₹3,972.18 crore to ₹5,097.99 crore, reflecting a higher
tax obligation due to increased profits.

🔹 Investing Activities
The net cash utilized in investing activities decreased from ₹(10,393.91) crore in FY 2023 to
₹(7,171.18) crore in FY 2024.
This indicates:
Managed acquisitions of new assets such as property and equipment
Divestments in FVTPL and FVOCI instruments (for instance, an inflow of ₹113,012.92 crore
from FVTPL liquidation)
Overall, a combination of investment and liquidation strategies to balance long-term planning
with liquidity needs.

🔹 Financing Activities
The net cash from financing activities rose from ₹50,675.04 crore to ₹82,415.08 crore in FY
2024, primarily due to:
An increase in deposits received, rising from ₹13,556.92 crore to ₹14,759.93 crore
Equity issuance and share warrants generating new capital (approximately ₹9,364 crore)
A rise in borrowings, with long-term borrowings reaching ₹72,666.31 crore

51
This illustrates Bajaj Finance’s ongoing dependence on external funding to facilitate rapid
growth.

🔹 Cash and Cash Equivalents

Despite the strong inflow from financing activities, the company’s net increase in cash was
limited to ₹2,483.76 crore due to substantial outflows from operating activities.
The ending cash balance is recorded at ₹4,034.51 crore (an increase from ₹1,550.75 crore),
indicating a more favorable liquidity position compared to the previous year.

52
1 Profitability Ratios
Total Income M&M Financial
End of Net Profit (Rs. (Rs. In Bajaj Finance Service Ltd (In Shriram Finance
the year In Crore) Crore) (In Proportion) Proportion) Ltd(In Proportion)
2019-20 5,263.75 26,385.63 19.95% 9.05% 15.15%
2020-21 4,419.82 26,683.05 16.56% 6.41% 14.33%
2021-22 7,028.23 31,640.41 22.21% 10.09% 14.12%
2022-23 11,507.69 41,405.69 27.79% 16.14% 19.73%
2023-24 14,451.17 54,982.51 26.28% 12.17% 20.32%
Table 8:- Net Profit Margin of the Bajaj Finance Limited

Net Profit
Net Profit Margin= ∗100
Total Income

5,263.75 14,451.17
2019-20: 26,385.63 ∗100=19.95 % 2023-24: 54,982.51 ∗100=26.28 %

Net Profit Margin - Graph 1

27.50%
22.50%
17.50%
12.50%
7.50%
2.50%
2019-20 2020-21 2021-22 2022-23 2023-24
Bajaj Fi- 0.19949305739525 0.16564148401325 0.22212828468404 0.27792532862029 0.26283212607063
nance Ltd 6 9 8 4 6
Mahindra & 0.09051153865348 0.06411240294153 0.10090250348449 0.16140394626102 0.12166631601621
Mahindra 62 9 3 7
Financial
Service Ltd
Shriram Fi- 0.15150009377282 0.14331111926773 0.14117814304384 0.19732375258084 0.20319369543671
nance Ltd 1 9 7 7 1

Bajaj Finance Ltd Mahindra & Mahindra Financial Service Ltd

Shriram Finance Ltd
-

Interpretation:- The Net Profit Margin (NPM) of Bajaj Finance Ltd. has demonstrated a strong and
consistent upward trend over the five-year period, rising from 19.95% in FY 2019–20 to a peak of

53
27.79% in FY 2022–23, followed by a slight dip to 26.28% in FY 2023–24. This reflects the company’s
robust control over expenses and efficient revenue conversion into profits. In comparison, M&M
Financial Services showed a fluctuating and relatively weaker margin, reaching a low of 6.41% in FY
2020–21, and then improving to 12.17% in FY 2023–24. Shriram Finance Ltd., on the other hand,
maintained a more stable margin with gradual improvement from 15.15% to 20.32% across the same
period. Overall, Bajaj Finance has outperformed its peers in terms of profitability, indicating stronger
operational efficiency-cy and sustained profit generation capability in the NBFC sector.

Table 9: Operating Profit Margin of the Bajaj Finance Limited

Total Income M&M Financial Shriram Finance

End of EBIT (Rs. (Rs. In Bajaj Finance Service Ltd (In Ltd(In
the year In Crore) Crore) (In Proportion) Proportion) Proportion)
2019-
20 16,795.33 26,385.63 63.65% 58.29% 70.61%
2020-
21 15,406.26 26,683.05 57.74% 51.29% 70.73%
2021-
22 19,252.02 31,640.41 60.85% 52.34% 68.92%
2022-
23 28,087.75 41,405.69 67.84% 61.55% 69.31%
2023-
24 38,034.26 54,982.51 69.18% 59.78% 69.98%

 EBIT = PBT + Interest Cost

EBIT
Operating Profit Margin= ∗100
Total Income

16,795.33
2019- 20: ∗100=63.65 % 2023- 24:
26,385.63
38,034.26
∗100=69.18 %
54,982.51

54
 Operating Profit Margin - Graph 2
75.00%
65.00%
55.00%
45.00%
35.00%
25.00%
15.00%
5.00%
2019-20 2020-21 2021-22 2022-23 2023-24
Bajaj Fi- 0.63653321902869 0.57738002214889 0.60846303824760 0.67835483480652 0.69175197712872
nance Ltd 1 2 8 1 7
Mahindra & 0.58288825814150 0.51285567560905 0.52337921724554 0.61547800879025 0.59782020648302
Mahindra 2 5 4 6
Financial
Service Ltd
Shriram Fi- 0.70609607764269 0.70727156981945 0.68918758362850 0.69308770472647 0.69980328448721
nance Ltd 8 3 2

Bajaj Finance Ltd Mahindra & Mahindra Financial Service Ltd

Shriram Finance Ltd

Interpretation: - Bajaj Finance Ltd.’s Operating Profit Margin (OPM) has demonstrated consistent
improvement over the past five years, increasing from 63.65% in FY 2019–20 to 69.18% in FY 2023–24,
which reflects robust operational efficiency and effective cost management. M&M Financial Services
exhibited weaker and more variable margins, finishing below its pre-pandemic levels. Shriram Finance
Ltd. has consistently achieved the highest OPM, remaining above 68%, which signifies superior
operational efficiency. In summary, while Shriram slightly leads in OPM, Bajaj Finance’s steady growth
underscores its strong and disciplined financial performance.

Table: 10 Return on Assets of the Bajaj Finance Limited

Net Profit Total Assets Bajaj Finance M&M Financial Shriram Finance
End of the (Rs. In (Rs. In (In Service Ltd (In Ltd(In
year Crore) Crore) Proportion) Proportion) Proportion)
2019-20 5,263.75 164,391.37 3.20% 1.33% 2.20%
2020-21 4,419.82 171,526.87 2.58% 0.91% 1.92%
2021-22 7,028.23 212,505.36 3.31% 1.37% 1.91%
2022-23 11,507.69 275,228.67 4.18% 1.97% 2.86%
2023-24 14,451.17 375,741.62 3.85% 1.57% 2.98%

55
 Net Profit
Returnon Assets= ∗100
Total Assets

5,263.75
2019- 20: ∗100=3.20 % 2023- 24:
164,391.37
14,451.17
∗100=3.85 %
375,741.62

Return on Assets - Graph 3

4.25%
3.25%
2.25%
1.25%
0.25%
2019-20 2020-21 2021-22 2022-23 2023-24
Bajaj Fi- 0.03201962487446 0.0257675080295 0.03307318930684 0.04181137815330 0.03846039201087
nance Ltd 88 85 07 17
Mahindra & 0.01327525950670 0.00911531513829 0.01372579083423 0.01970980190564 0.01570575591038
Mahindra 58 455 97 25 14
Financial
Service Ltd
Shriram Fi- 0.02198619551836 0.01924726741842 0.01912655649725 0.02858511734203 0.02980227573705
nance Ltd 12 15 14 42 84

Bajaj Finance Ltd Mahindra & Mahindra Financial Service Ltd

Shriram Finance Ltd

Interpretation: Bajaj Finance Ltd. exhibited a consistent increase in Return on Assets (ROA) over a five-
year period, rising from 3.20% in FY 2019–20 to 3.85% in FY 2023–24, reaching a high of 4.18% in FY
2022–23, which indicates robust asset profitability. M&M Financial Services displayed the lowest ROA
throughout this timeframe, showing only minimal recovery after the pandemic. Shriram Finance
experienced a steady upward trajectory but continued to lag behind Bajaj. In summary, Bajaj Finance
surpassed both competitors, showcasing superior asset utilization and profit generation.

56
Table 11: Return on Equity of the Bajaj Finance Limited

Net
Profit Shareholder's M&M Financial Shriram
End of (Rs. In Equity (Rs. In Bajaj Finance Service Ltd (In Finance Ltd(In
the year Crore) Crore) (In Proportion) Proportion) Proportion)
2019-20 5,263.75 32,327.63 16.28% 9.07% 13.85%
2020-21 4,419.82 36,918.41 11.97% 4.95% 11.51%
2021-22 7,028.23 43,712.69 16.08% 6.81% 10.43%
11,507.6
2022-23 9 54,371.98 21.16% 11.16% 13.84%
14,451.1
2023-24 7 76,695.35 18.84% 9.75% 15.12%

Net Profit
Returnon Equity= ∗100
Shareholder ' s Equity

5,263.75
2019-20: ∗100=16.28 % 2023-24:
32,327.63
14,451.17
∗100=18.84 %
76,695.35

57
 Return on Equity - Graph 4
22.50%
17.50%
12.50%
7.50%
2.50%
2019-20 2020-21 2021-22 2022-23 2023-24
Bajaj Fi- 0.16282511275958 0.11971859026431 0.16078237234999 0.21164743310800 0.18842302695013
nance Ltd 1 5 7 9 5
Mahindra & 0.09071913055560 0.04945877917417 0.06808232093279 0.11159428645012 0.09747783226518
Mahindra 92 54 51
Financial
Service Ltd
Shriram Fi- 0.13847575088288 0.11506177796585 0.10427963851053 0.13835059336481 0.15116073104941
nance Ltd 1 1 8 2 5

Bajaj Finance Ltd Mahindra & Mahindra Financial Service Ltd

Shriram Finance Ltd

Interpretation: - The Return on Equity (ROE) for Bajaj Finance Ltd. demonstrates robust and steady
returns for shareholders, beginning at 16.28% in FY 2019–20, declining to 11.97% in FY 2020–21 due to
the pandemic, and reaching a high of 21.16% in FY 2022–23. Despite a slight decrease to 18.84% in FY
2023–24, the company has consistently maintained elevated ROE levels, signifying effective capital
utilization and strong profitability in relation to the equity invested. M&M Financial Services exhibited
the lowest ROE performance throughout the period, falling to as low as 4.95% in FY 2020–21, and
showing a modest improvement to 9.75% in FY 2023–24, indicating reduced efficiency in generating
returns for shareholders. Shriram Finance Ltd. displayed a relatively stable ROE, fluctuating between
10.43% and 15.12%, which implies a consistent, albeit moderate, return on equity. In summary, Bajaj
Finance excels in ROE performance, solidifying its status as a financially robust and investor-friendly
non-banking financial company (NBFC) with a strong capacity for generating returns over the years.

2 Liquidity Ratios
Table 12:- Current Ratio of the Bajaj Finance Limited

Current Current Bajaj Finance M&M Financial Shriram Finance

End of Assets (Rs. Liabilities (Rs. (In Service Ltd (In Ltd(In
the year In Crore) In Crore) Proportion) Proportion) Proportion)
2019-20 161,897.07 56,404.98 2.87 2.17 2.58
2020-21 168,904.38 49,579.53 3.41 2.28 2.74

58
 2021-22 209,458.37 57,125.11 3.67 2.48 2.92
2022-23 271,593.53 84,954.14 3.20 2.11 2.53
2023-24 370,991.19 116,292.60 3.19 1.95 2.35
Current Assets
Current Ratio=
Current Liabilities

161,897.07
2019-20: =2.87 2023-24:
56,404.98
370,991.19
=3.19
116,292.60

Current Ratio - Graph 13

3.75
3.25
2.75
2.25
1.75
1.25
0.75
0.25
2019-20 2020-21 2021-22 2022-23 2023-24
Bajaj Fi- 2.87026198750536 3.40673620746304 3.66666024800652 3.19694284469244 3.19015302779369
nance Ltd
Mahindra & 2.16806887654944 2.28183049411665 2.47935674811251 2.10651281916181 1.95388604390055
Mahindra
Financial
Service Ltd
Shriram Fi- 2.58108040378451 2.73989869722782 2.92255304892133 2.52827909355017 2.34716441806431
nance Ltd

Bajaj Finance Ltd Mahindra & Mahindra Financial Service Ltd

Shriram Finance Ltd

Interpretation: - The Current Ratio of Bajaj Finance Ltd. exhibited a robust liquidity position throughout
the five-year span, increasing from 2.87 in FY 2019–20 to a high of 3.67 in FY 2021–22, and
subsequently stabilizing around 3.19 in FY 2023–24. This suggests that the company has consistently
maintained a substantial cushion of current assets over current liabilities, allowing it to effectively meet
its short-term obligations. M&M Financial Services, on the other hand, recorded relatively lower current
ratios, which gradually decreased from 2.17 to 1.95 during the same timeframe, indicating diminished
short-term liquidity strength and a growing dependence on short-term liabilities. Similarly, Shriram
Finance Ltd. displayed a slight decline in its current ratio from 2.58 to 2.35, although it remained above
the standard benchmark of 1, signifying a reasonable liquidity position but with a smaller buffer
compared to Bajaj Finance. In summary, Bajaj Finance excels in short-term liquidity management,
showcasing effective working capital control and a low-risk liquidity profile among the three NBFCs.

59
 Total Debt Shareholders’ M&M Financial Shriram Finance
End of (Rs. In Equity (Rs. In Bajaj Finance (In Service Ltd (In Ltd(In
the year Crore) Crore) Proportion) Proportion) Proportion)
2019-20 132,063.74 32,327.63 4.09 5.83 5.30
2020-21 134,608.46 36,918.41 3.65 4.42 4.98
2021-22 168,792.67 43,712.69 3.86 3.95 4.45
2022-23 220,856.69 54,371.98 4.06 4.65 3.83
2023-24 299,046.27 76,695.35 3.90 5.20 4.06

3 Leverage / Solvency Ratios

Table 13:- Debt to Equity Ratio of the Bajaj Finance Limited

Total Debt
Debt ¿ Equity=
Shareholders ’ Equity

132,063.74 299,046.27
2019-20: =4.09 2023-24: =3.90
32,327.63 76,695.35

Debt to Equity Ratio - Graph 5

6.50
5.50
4.50
3.50
2.50
1.50
0.50
2019-20 2020-21 2021-22 2022-23 2023-24
Bajaj Fi- 4.08516615662825 3.6461066443544 3.86141118288534 4.06195783195683 3.89914473302488
nance Ltd
Mahindra & 5.82620636785279 4.41961427121702 3.95180249415405 4.65425167658131 5.20441623919832
Mahindra
Financial
Service Ltd
Shriram Fi- 5.29830435043828 4.9780838216923 4.4520863975449 3.83336351598125 4.05721617817741
nance Ltd

Bajaj Finance Ltd Mahindra & Mahindra Financial Service Ltd

Shriram Finance Ltd

Interpretation :- The Debt to Equity (D/E) ratio of Bajaj Finance Ltd. has remained relatively stable
throughout the five-year period, fluctuating between 3.65 and 4.09, with a slight peak of 4.06 observed in
FY 2022–23, followed by a minor decrease to 3.90 in FY 2023–24. This trend suggests a well-balanced
capital structure, indicating that the company is effectively utilizing debt to support its growth while

60
keeping financial risk at a manageable level. In contrast, M&M Financial Services exhibited a higher
leverage position, with its D/E ratio reaching a peak of 5.83 in FY 2019–20 and concluding at 5.20 in FY
2023–24. This reflects a greater dependence on debt and potentially increased financial risk. Shriram
Finance Ltd. has maintained a moderate position, with its ratio varying from 3.83 to 5.30, indicating a
moderately leveraged capital structure in comparison to the other two companies. In summary, while all
three NBFCs operate with elevated D/E ratios, which is characteristic of the industry, Bajaj Finance
appears to have sustained the most consistent and controlled levels of debt, thereby supporting its
financial stability and strategic capital management.
Table 14: Proprietary Ratio of the Bajaj Finance Limited

Bajaj
Shareholders’ Total Assets Finance (In M&M Financial Shriram
End of the Funds (Rs. In (Rs. In Proportion Service Ltd (In Finance Ltd(In
year Crore) Crore) ) Proportion) Proportion)
2019-20 32,327.63 164,391.37 20% 14.63% 15.88%
2020-21 36,918.41 171,526.87 22% 18.43% 16.73%
2021-22 43,712.69 212,505.36 21% 20.16% 18.34%
2022-23 54,371.98 275,228.67 20% 17.66% 20.66%
2023-24 76,695.35 375,741.62 20% 16.11% 19.72%

Shareholders’ Funds
Proprietary Ratio= ∗100
Total Assets

32,327.63 76,695.35
2019-20: ∗100=20 % 2023-24: ∗100=20 %
164,391.37 375,741.62

61
 Proprietary Ratio - Graph 6
23%
18%
13%
8%
3%
2019-20 2020-21 2021-22 2022-23 2023-24
Bajaj Fi- 0.19665040810840 0.21523397471195 0.20570158795053 0.19755202101583 0.2041172601534
nance Ltd 6 5 4
Mahindra & 0.14633362803855 0.18430125632892 0.20160580083320 0.17662017055373 0.16112130876745
Mahindra 7 8 8 5 8
Financial
Service Ltd
Shriram Fi- 0.15877289256915 0.16727768124818 0.18341602224981 0.20661362301973 0.19715620273969
nance Ltd 8 9 3 7 1

Bajaj Finance Ltd Mahindra & Mahindra Financial Service Ltd

Shriram Finance Ltd

Interpretation: - Bajaj Finance Ltd. maintained a stable proprietary ratio between 20% and 22%
over five years, indicating a strong and balanced capital structure with moderate reliance on
equity. M&M Financial Services showed more fluctuation, ending with a weaker ratio of
16.11%, while Shriram Finance steadily improved but remained slightly below Bajaj. Overall,
Bajaj Finance demonstrated the most consistent and resilient capital base among the three.

Table 15: Interest Coverage Ratio of the Bajaj Finance Limited

Interest Bajaj Finance M&M Financial Shriram Finance

End of EBIT (Rs. Expense (Rs. (In Service Ltd (In Ltd(In
the year In Crore) In Crore) Proportion) Proportion) Proportion)
2019-20 16,795.33 9,473.21 1.77 1.30 1.42
2020-21 15,406.26 9,414.00 1.64 1.18 1.36
2021-22 19,252.02 9,748.24 1.97 1.35 1.36
2022-23 28,087.75 12,559.89 2.24 1.55 1.64

62
 2023-24 38,034.26 18,724.69 2.03 1.37 1.64

EBIT
Interest Coverage Ratio=
Interest Expense

16,795.33 38,034.26
2019-20: =1.77 2023-24: =2.03
9,473.21 18,724.69

Interest Coverage Ratio - Graph 7

2.25
1.75
1.25
0.75
0.25
2019-20 2020-21 2021-22 2022-23 2023-24
Bajaj Fi- 1.77292913384164 1.63652644996813 1.97492265270449 2.23630541350283 2.03123576411679
nance Ltd
Mahindra & 1.29719149780198 1.17600144698987 1.3507562191983 1.55037198437469 1.37190769053914
Mahindra
Financial
Service Ltd
Shriram Fi- 1.41578741176215 1.36204063059819 1.36461238649683 1.63518277787101 1.64169076187237
nance Ltd

Bajaj Finance Ltd Mahindra & Mahindra Financial Service Ltd

Shriram Finance Ltd

Interpretation:- The Interest Coverage Ratio (ICR) for Bajaj Finance Ltd. has demonstrated consistent
enhancement over the five-year span, rising from 1.77 in FY 2019–20 to a high of 2.24 in FY 2022–23,
before experiencing a slight decline to 2.03 in FY 2023–24. This pattern indicates that the company has
gradually bolstered its capacity to fulfill interest obligations through operational profits, showcasing
robust financial stability and operational earnings. Conversely, M&M Financial Services has persistently
recorded the lowest ICR figures among the three, beginning at 1.30, decreasing to 1.18 in FY 2020–21,
and concluding at 1.37 in FY 2023–24, signifying tighter coverage and a greater interest burden in
relation to earnings. Shriram Finance Ltd. exhibited only slight variations in its ICR, remaining within a
narrow band from 1.36 to 1.64, indicating a moderate capacity to service debt but with minimal progress
over time. In summary, Bajaj Finance excels in interest coverage capability, reflecting substantial EBIT
growth and enhanced risk resilience compared to its competitors in the NBFC sector.

63
 Table 16: Capital Adequacy Ratio of the Bajaj Finance Limited

Bajaj M&M Financial Shriram

End of the Tier I + Tier Risk Weighted Finance (In Service Ltd (In Finance Ltd(In
year II Capital Assets Proportion) Proportion) Proportion)
2019-20 33,741.15 134,916.74 25.01% 19.60% 21.99%
2020-21 37,018.33 130,767.51 28.31% 26% 22.50%
2021-22 42,421.42 155,832.47 27.22% 27.80% 22.97%
2022-23 49,665.82 198,890.13 24.97% 22.50% 22.61%
2023-24 70,962.72 315,149.85 22.52% 18.90% 20.30%

Tier I +Tier II Capital

Capital Adequacy Ratio= * 100
Risk Weighted Assets

33,741.15
2019-20: ∗100=25.01 % 2023-24:
134,916.74
70,962.72
∗100=22.52
315,149.85

Capital Adequacy Ratio - Graph 14

27.50%
22.50%
17.50%
12.50%
7.50%
2.50%
2019-20 2020-21 2021-22 2022-23 2023-24
Bajaj Fi- 0.25008868432486 0.28308507212533 0.27222452419576 0.24971485513132 0.22517135895828
nance Ltd 6 1 3 6
Mahindra & 0.196 0.26 0.278 0.225 0.189
Mahindra
Financial
Service Ltd
Shriram Fi- 0.2199 0.225 0.2297 0.2261 0.203
nance Ltd

Bajaj Finance Ltd Mahindra & Mahindra Financial Service Ltd

Shriram Finance Ltd

Interpretation: Bajaj Finance Ltd. sustained a robust Capital Adequacy Ratio (CAR) exceeding regulatory
requirements, reaching a high of 28.31% before adjusting to 22.52% by the fiscal year 2023–24. This
indicates a solid capital foundation despite an increase in risk-weighted assets. In contrast, M&M
Financial Services experienced greater variability, concluding with a lower CAR of 18.90%. Shriram

64
Finance exhibited a consistent and moderate CAR throughout the period. In summary, Bajaj Finance
demonstrated the highest level of capital adequacy, particularly in the earlier years, underscoring its
strong financial resilience.

4 Efficiency Ratios
Table 17: Asset Turnover Ratio of the Bajaj Finance Limited

Total Income Total Assets Bajaj M&M Financial Shriram Finance

End of the (Rs. In (Rs. In Finance (In Service Ltd (In Ltd(In
year Crore) Crore) Proportion) Proportion) Proportion)
2019-20 26,385.63 164,391.37 0.16 0.15 0.15
2020-21 26,683.05 171,526.87 0.16 0.14 0.13
2021-22 31,640.41 212,505.36 0.15 0.14 0.14
2022-23 41,405.69 275,228.67 0.15 0.12 0.14
2023-24 54,982.51 375,741.62 0.15 0.13 0.15

Total Income
Asset Turnover Ratio=
Total Assets

26,385.63
2019-20: =0.16 2023-24:
164,391.37
164,391.37
=0.15
375,741.62

65
 Asset Turnover Ratio - Graph 8
0.17
0.13
0.09
0.05
0.01
2019-20 2020-21 2021-22 2022-23 2023-24
Bajaj Fi- 0.16050495838072 0.15556192449614 0.14889229146973 0.15044104961885 0.14633063539780
nance Ltd 3 5 3
Mahindra & 0.14666925017735 0.14217709397987 0.13603023076973 0.12211474602837 0.12908877678427
Mahindra 8 1 6 3 3
Financial
Service Ltd
Shriram Fi- 0.14512331293556 0.13430407575327 0.13547817023851 0.14486404686796 0.14666929341979
nance Ltd 9 9 3 3

Bajaj Finance Ltd Mahindra & Mahindra Financial Service Ltd

Shriram Finance Ltd

Interpretation: - Bajaj Finance Ltd. exhibited a consistent Asset Turnover Ratio ranging from 0.15 to 0.16
over a five-year period, indicating a reliable and effective utilization of assets to produce revenue, which
is typical in the NBFC sector. M&M Financial Services experienced a minor decrease from 0.15 to 0.13,

whereas Shriram Finance maintained stability within a comparable range. In summary, Bajaj Finance
outperformed the other two companies in terms of asset efficiency

Table 18: Cost-to-Income Ratio of the Bajaj Finance Limited

Operating Total Income Bajaj Finance M&M Financial Shriram

End of the Expenses (Rs. In (Rs. In (In Service Ltd (In Finance Ltd(In
year Crore) Crore) Proportion) Proportion) Proportion)
2019-20 5,660.82 26,385.63 21.45% 22.76% 12.50%
2020-21 5,308.21 26,683.05 19.89% 18.06% 11.39%
2021-22 7,584.99 31,640.41 23.97% 24.64% 11.05%
2022-23 10,129.96 41,405.69 24.47% 29.14% 17.03%
2023-24 12,325.19 54,982.51 22.42% 28.32% 17.52%

66
Operating Expense=Fees∧Commision+ Employeee Benefit Expense + Dep .∧ Amortisation+ Other Expense

Operating Expenses
Cost −¿−Income Ratio= ∗100
Total Income

5,660.82
2019-20: ∗100=21.45 % 2023-24:
26,385.63
12,325.19
∗100=22.42 %
54,982.51

Cost-to-Income Ratio - Graph 9

32.50%
27.50%
22.50%
17.50%
12.50%
7.50%
2.50%
2019-20 2020-21 2021-22 2022-23 2023-24
Bajaj Fi- 0.21454177899106 0.19893565390763 0.23972476968534 0.24465139936081 0.22416564831252
nance Ltd 4 1 9 2 7
Mahindra & 0.22763236719550 0.18061131424345 0.246386345874 0.29137261930737 0.28323164470092
Mahindra 9 8 8
Financial
Service Ltd
Shriram Fi- 0.12495424429056 0.11388417333853 0.11050039353063 0.17025939421909 0.17517731996191
nance Ltd 2 3 7 8 5

Bajaj Finance Ltd Mahindra & Mahindra Financial Service Ltd

Shriram Finance Ltd

Interpretation: - Bajaj Finance Ltd. consistently exhibited a low Cost-to-Income Ratio ranging from
19.89% to 24.47%, underscoring its robust cost control and operational efficiency. In contrast, M&M
Financial Services displayed higher and more volatile ratios, suggesting inferior cost management.
Shriram Finance recorded the lowest ratios overall, signifying outstanding efficiency. Although Shriram
excels in maintaining minimal costs, Bajaj Finance effectively balances cost and income, establishing
itself as a strong performer.

Table 19: Operating Expenses to AUM of the Bajaj Finance Limited

End of the Operating AUM (Rs. Bajaj Finance M&M Financial Shriram Finance

67
 Expenses (Rs. (In Service Ltd (In Ltd(In
year In Crore) In Crore) Proportion) Proportion) Proportion)
2019-20 5,660.82 147,153.00 0.04 0.04 0.02
2020-21 5,308.21 152,947.00 0.03 0.03 0.02
2021-22 7,584.99 197,452.00 0.04 0.04 0.02
2022-23 10,129.96 247,379.00 0.04 0.04 0.03
2023-24 12,325.19 330,615.00 0.04 0.04 0.03

Operating Expenses
Operating Expense ¿ AUM Ratio=
AUM

5,660.82
2019-20: =0.04 2023-24:
147,153.00
12,325.19
=0.04
330,615.00

Operating Expenses to AUM - Graph 10

0.05
0.04
0.02
0.02
0.01
2019-20 2020-21 2021-22 2022-23 2023-24
Bajaj Fi- 0.03846894049050 0.03470620541756 0.03841434880375 0.04094915089801 0.03727958501580
nance Ltd 99 29 99 48 39
Mahindra & 0.03539115733540 0.02690855842312 0.03520094740403 0.03755345754030 0.04408813259910
Mahindra 69 93 78 03 62
Financial
Service Ltd
Shriram Fi- 0.01888003962487 0.01693690069890 0.01676476371460 0.02797425675153 0.02836731225083
nance Ltd 58 85 33 86 05

Bajaj Finance Ltd Mahindra & Mahindra Financial Service Ltd

Shriram Finance Ltd

Interpretation: - Bajaj Finance Ltd. sustained a consistent Operating Expenses to AUM Ratio of 0.04 over
a five-year period, with a slight enhancement to 0.03 in FY 2020–21, demonstrating robust cost efficiency
in the face of business expansion. M&M Financial Services exhibited a comparable trend, albeit with less
advancement, whereas Shriram Finance consistently recorded lower ratios (0.02–0.03), signifying

68
superior cost management. In summary, Bajaj Finance’s proficiency in controlling expenses while
increasing its AUM underscores its operational prowess.

5 Banking/Lending Ratios
Table 20: Net Interest Margin of the Bajaj Finance Limited

Shriram
End of Net Interest Average Earning Bajaj M&M Financial Finance
the Income (Rs. In Assets (Rs. In Finance (In Service Ltd (In Ltd(In
year Crore) Crore) Proportion) Proportion) Proportion)
2019-
20 13,497.18 140,015.90 9.64% 8.06% 7.76%
2020-
21 13,889.38 162,001.87 8.57% 8.81% 7.45%
2021-
22 17,521.52 184,376.29 9.50% 9.56% 7.58%
2022-
23 22,990.30 234,344.78 9.81% 9.00% 10.51%
2023-
24 29,581.91 311,097.37 9.51% 7.73% 9.26%

Net Interest Income=Interest Expense−Interest Income

Opening Earning Asset +Closing Earning Asset

Average Earning Aseets=
2

Net Interest Income

Net Interest Margin= * 100
Average Earning Assets

13,497.18
2019-20: ∗100=9.64 % 2023-24:
140,015.90
29,581.91
∗100=9.51 %
311,097.37

69
 Net Interest Margin - Graph 11
11.00%
9.00%
7.00%
5.00%
3.00%
1.00%
2019-20 2020-21 2021-22 2022-23 2023-24
Bajaj Fi- 0.09639748057184 0.08573592655862 0.09503131056144 0.09810459614248 0.09508891058770
nance Ltd 93 33 23 72 44
Mahindra & 0.08064104660518 0.08805377288687 0.09560530524232 0.09000001038180 0.07731461452573
Mahindra 33 04 64 65 42
Financial
Service Ltd
Shriram Fi- 0.07762602885039 0.07447642383507 0.07575412734593 0.10508162363266 0.09257761802425
nance Ltd 91 9 56 6 51

Bajaj Finance Ltd Mahindra & Mahindra Financial Service Ltd

Shriram Finance Ltd

Interpretation: - Bajaj Finance Ltd. maintained a strong and steady NIM between 8.57% and 9.81%,
with a quick recovery post-pandemic, reflecting efficient interest income generation and cost control.
M&M Financial Services showed moderate and slightly declining NIMs, while Shriram Finance
experienced higher but more volatile margins. Overall, Bajaj Finance demonstrated the most consistent
and balanced NIM performance among the three NBFCs.

Table 21: Loan-to-Deposit Ratio of the Bajaj Finance Limited

Total Shriram
Total Loans & Deposits Bajaj M&M Financial Finance
End of Advances (Rs. In Finance (In Service Ltd (In Ltd(In
the year (Rs. In Crore) Crore) Proportion) Proportion) Proportion)
2019-20 141,376.05 21,427.15 6.60 8.30 8.55
2020-21 146,686.87 25,803.43 5.68 7.16 6.67
2021-22 191,423.25 30,799.52 6.22 8.17 5.32
2022-23 242,268.93 44,665.56 5.42 15.84 4.94
2023-24 326,293.32 60,150.92 5.42 14.82 4.92

Total Loans∧ Advances

Loans−¿−Deposits Ratio=
Total Deposits

70
 141,376.05
2019-20: =6.60 2023-24:
21,427.15
326,293.32
=5.42
60,150.92

Loan-to-Deposit Ratio - Graph 12

17.00
13.00
9.00
5.00
1.00
2019-20 2020-21 2021-22 2022-23 2023-24
Bajaj Fi- 6.5979866664 5.6847818293 6.2151374437 5.4240656559 5.4245773796
nance 4887 9245 0042 5506 976
Ltd
Mahin- 8.2975230754 7.1614962802 8.1652868724 15.838100001 14.822015601
dra & 4758 2583 853 0992 9808
Mahin-
dra Fi-
nancial
Service
Ltd
Shriram 8.5477093875 6.6720246716 5.3152879997 4.9442717356 4.9207380760
Finance Bajaj3123
Finance Ltd 2917
Mahindra & Mahindra
157 Financial
4458Service Ltd 2704
Ltd Shriram Finance Ltd

Interpretation: - Bajaj Finance Ltd.'s Loan-to-Deposit Ratio (LDR) has consistently decreased from 6.60
to 5.42 over a period of five years, demonstrating enhanced reliance on deposits and a more balanced
funding structure, which is particularly significant for a Non-Banking Financial Company (NBFC). In
contrast, M&M Financial Services exhibited a high and fluctuating LDR, suggesting aggressive lending
practices and associated liquidity risks. Meanwhile, Shriram Finance displayed a more stable and
improving LDR. In summary, Bajaj Finance's managed LDR underscores its transition towards a more
sustainable and resilient funding model.

6 Asset Quality Ratios

Table 22:- Net NPA to net Advance of the Bajaj Finance Limited

End of the Bajaj Finance (In M&M Financial Service Ltd Shriram Finance Ltd (In
year Proportion) (In Proportion) Proportion)
2019-20 0.65% 5.98% 5.69%
2020-21 0.75% 3.97% 4.26%

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 2021-22 0.68% 3.36% 3.67%
2022-23 0.34% 1.87% 3.19%
2023-24 0.37% 1.28% 2.70%

Net NPAs
Net NPA ¿ Net Advance= ∗100
Net Advances

Net NPA to net Advance - Graph 15

6.50%
4.50%
2.50%
0.50%
2019-20 2020-21 2021-22 2022-23 2023-24
Bajaj Finance Ltd 0.0065 0.0075 0.0068 0.0034 0.0037
Mahindra & Mahindra Financial 0.0598 0.0397 0.0336 0.0187 0.0128
Service Ltd
Shriram Finance Ltd 0.0569 0.0426 0.0367 0.0319 0.027

Bajaj Finance Ltd Mahindra & Mahindra Financial Service Ltd

Shriram Finance Ltd

Interpretation: Bajaj Finance Ltd. has consistently maintained very low net NPA levels over a period of
five years, improving from 0.75% in FY 2020–21 to 0.37% in FY 2023–24, which indicates strong credit
quality and effective recovery practices. M&M Financial Services has made significant strides in
reducing its net NPA from 5.98% to 1.28%, demonstrating enhanced credit risk management. Shriram
Finance has also shown gradual improvement; however, it continues to report higher NPAs, concluding at
2.70%. In summary, Bajaj Finance has excelled in asset quality, possessing the lowest credit risk among
the three companies.

Please note:
The ratio of Net Non-Performing Assets (NPA) to Net Advances has been sourced directly from the
annual reports of the company, as provided by the management. This ratio has not been manually
computed, as the precise details regarding provisioning and classification are not accessible to the public
in a format that would allow for calculation

72
7 DuPont Analysis
Table 23:- DU PONT ROE of the Bajaj Finance Limited

End of the Bajaj Finance ROE (In M&M Financial Service Ltd (In Shriram Finance Ltd(In
year Proportion) Proportion) Proportion)
2019-20 16.28% 9.07% 13.85%
2020-21 11.97% 4.95% 11.51%
2021-22 16.08% 6.81% 10.43%
2022-23 21.16% 11.16% 13.84%
2023-24 18.84% 9.75% 15.12%

DU PONT ROE=Net Profit Margin∗Asset Turnover∗Equity Multiplier

Total Assets
Equity Multiplier= '
Shareholde r s Equity

2019-20: 19.95 %∗0.16∗5.09=16.28 % 2023-24: 26.28 %∗0.15∗4.90=18.84 %

DuPont ROE - Graph 16

22.50%
17.50%
12.50%
7.50%
2.50%
2019-20 2020-21 2021-22 2022-23 2023-24
Bajaj Fi- 0.1628251127 0.1197185902 0.1607823723 0.2116474331 0.1884230269
nance 59581 64315 49997 08009 50135
Ltd
Mahin- 0.0907191305 0.0494587791 0.0680823209 0.1115942864 0.0974778322
dra & 556092 7417 327954 5012 65185
Mahin-
dra Fi-
nancial
Service
Ltd
Bajaj Finance Ltd Mahindra & Mahindra Financial Service Ltd
Shriram 0.1384757508
Shriram Finance0.1150617779
Ltd 0.1042796385 0.1383505933 0.1511607310
Finance 82881 65851 10538 64812 49415
Ltd

Interpretation: Over the course of five years, Bajaj Finance Ltd. has demonstrated a consistently
robust return on equity (ROE) performance, beginning at 16.28% in the fiscal year 2019–20,
reaching a peak of 21.16% in 2022–23, and experiencing a slight decline to 18.84% in 2023–24.
This trend reflects strong profitability, effective asset utilization, and a well-balanced structure.

73
In contrast, M&M Financial Services Ltd. recorded the lowest ROE, which fell to 4.95% in
2020–21 amid the COVID-19 pandemic, and has been gradually recovering to 9.75% in 2023–
24, yet still remains behind. Shriram Finance Ltd. has maintained a stable performance, with
ROE fluctuating between 10.43% and 15.12%, signifying moderate but steady returns for
shareholders. In summary, Bajaj Finance excels in returns, Shriram Finance remains stable, and
M&M Financial Services shows a gradual recovery.

2.5 Future Outlook of the Company (Projections) – Bajaj Finance Ltd

Bajaj Finance Ltd is well-positioned for sustained growth in the coming years, supported by its
strong capital base, robust governance, and diversified loan portfolio. With a proven track record
of innovation and customer-centric solutions, the company is expected to continue expanding its
footprint in both urban and rural markets.

One of the key drivers of its future strategy is digital transformation. Bajaj Finance is rapidly
evolving into a tech-enabled financial powerhouse, leveraging AI, data analytics, and cloud
platforms to deliver faster, smarter, and more personalized financial services. Its strategic
partnerships with e-commerce platforms, digital marketplaces, and fintech apps are expected to
boost customer acquisition and cross-selling.

In terms of growth, the company is aiming to scale its Assets Under Management (AUM)
significantly by entering underserved regions and introducing new verticals such as healthcare

74
finance, subscription-based models, and lifestyle credit. It is also expanding its co-branded
credit card and Bajaj Pay ecosystem to capture more value from its existing customer base.

Furthermore, Bajaj Finance is expected to align with global sustainability goals by increasing its
focus on green finance offerings such as electric vehicle (EV) loans, solar energy financing, and
ESG-compliant initiatives. As the regulatory landscape becomes stricter, the company is
strengthening its compliance frameworks and risk management to remain agile and resilient.

Overall, Bajaj Finance Ltd is projected to maintain its leadership position by focusing on scale,
speed, service, and sustainability.

2.6 SWOT Analysis of the Company

Strengths  A robust brand reputation and consumer trust in the finance sector.
 A varied product range including personal loans, EMI cards, credit
cards, SME loans, etc.
 High profitability with a return on equity (ROE) of approximately
21.5% and a low gross non-performing asset (GNPA) ratio of 0.94% for
FY23.
 An advanced digital infrastructure supported by a cloud-native lending
platform.
 A substantial and expanding customer base with over 80 million active
users.
Weaknesses  A significant reliance on interest income, with limited sources of non-
interest revenue.
 The risk associated with unsecured retail lending may heighten during

75
 economic downturns.
 A restricted international presence when compared to global
competitors.
 Increased compliance costs resulting from the Reserve Bank of India's
Upper Layer NBFC regulations.
Opportunities  Growth potential in Tier 2 and Tier 3 markets through digital channels.
 Opportunities in green finance and ESG lending, such as electric
vehicles and solar financing.
 Potential for co-branded partnerships and cross-selling via a super app.
 An increasing demand for personal credit and lifestyle loans among
Generation Z and millennials.
Threats  Intensifying competition from fintech companies, traditional banks, and
emerging NBFCs.
 Stricter regulations under the Scale-Based Regulation (SBR).
 Macro-economic risks, including interest rate increases or inflation,
which could affect credit quality.
 Risks related to cybersecurity and the privacy of customer data.
Table - 24

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 Chapter 3
Competitors’ Analysis

3.1 Porter’s Five Force Model

1. Threat of New The Non-Banking Financial Company (NBFC) sector in India is subject
Entrants – Low to stringent regulations imposed by the Reserve Bank of India (RBI),
necessitating substantial capital investment, licensing, and adherence to
compliance standards. Bajaj Finance has successfully built a robust brand
reputation, an extensive distribution network, and technology-enhanced
lending solutions, which pose significant challenges for new entrants
aiming to compete at a similar level.
2.Bargaining In the realm of financial services, the term "suppliers" generally refers to
Power of Suppliers depositors, banks, or market lenders. Given that Bajaj Finance has access
– Low to various funding sources (including retail deposits, debentures, and
bank lines) and maintains strong credit ratings (CRISIL AAA), the

77
 influence of any individual supplier is considerably diminished.
3.Bargaining As digitization progresses and numerous competing NBFCs and banks
Power of provide loan options, customers are presented with comparative interest
Customers – rates, offers, and terms. This scenario enhances the negotiating power of
Moderate to High borrowers, particularly in areas such as personal loans or consumer
finance. Nevertheless, Bajaj’s loyalty programs and EMI card offerings
play a crucial role in retaining a significant customer base.
4.Threat of Substitutes encompass traditional banks, fintech companies, peer-to-peer
Substitutes – lending platforms, and UPI-based credit lines. While these alternatives
Moderate are on the rise, Bajaj Finance distinguishes itself by offering unique
products such as 0% EMI financing, rapid digital approvals, and co-
branded credit cards, which mitigate the risk of substitution in the near
term.
5. Industry The Non-Banking Financial Company (NBFC) sector is characterized by
Rivalry – High intense competition, featuring prominent entities such as HDFC Ltd.,
M&M Finance, along with fintech companies like Paytm and Navi.
Continuous innovation, exceptional customer service, and aggressive
pricing strategies heighten the competitive landscape. Nevertheless,
Bajaj Finance sustains a competitive advantage due to its robust capital
foundation, varied product offerings, and technology-driven operations.
Table - 25

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CHAPTER - 4

79
 PROBLEM IDENTIFICATION

4.1 Introduction of the study

Financial analysis is systematic approach which explore financial data in order to evaluate the
performance, strength & viability of a business entity. This process require a thorough evaluation
of financial statement, which includes the balance sheet, income statement, & cash flow
statement, to gain insights into how effectively an organization is utilizing its resources,
generating profits, managing liabilities & maintaining operations.

The main function of financial analysis is to generate valuable insights regarding an

organization’s financial condition by identifying patterns, trends, and irregularities in financial
data. It support’s in decision-making by enabling stakeholder to get bottom of company’s
profitability, liquidity status, solvency & operational efficiency.

In both corporate and investment environments, financial analysis acts as a foundation for
strategic decisions such as budgeting, forecasting, credit assessment, mergers, investment
planning, and performance evaluation. It converts raw accounting data into relevant knowledge,

80
assisting internal management, investors, lenders, and regulators in assessing past performance
and predicting future potential. Financial analysis encompasses the use of financial data to
evaluate a company’s performance and to provide recommendations for future improvements.
Financial analysts predominantly perform their tasks in Excel, utilizing spreadsheets to analyze
historical data and project how they anticipate the company will perform in the future.

1. Vertical Analysis

This type of analysis in finance involves looking at various components of the income
statement and dividing them by revenue to express them as a percentage. For this exercise to be
most effective, the results should be benchmarked against other companies in the same industry
to see how well the company is performing.

This process is also sometimes called a common-sized income statement, as it allows an analyst
to compare companies of different sizes by evaluating their margins instead of their dollars.

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 Figure 4: Vertical Analysis
2. Horizontal Analysis

Horizontal analysis involves taking several years of financial data and comparing them to each
other to determine a growth rate. This will help an analyst determine if a company is growing or
declining, and identify important trends.

When building financial models, there will typically be at least three years of historical financial
information and five years of forecasted information. This provides 8+ years of data to perform a
meaningful trend analysis, which can be benchmarked against other companies in the same
industry.

82
 Figure 5: Horizontal Analysis

3. Leverage Analysis

Leverage ratios are one of the most common methods analysts use to evaluate company
performance. A single financial metric, like total debt, may not be that insightful on its own, so
it’s helpful to compare it to a company’s total equity to get a full picture of the capital structure.
The result is the debt/equity ratio.

Common examples of ratios include:

 Debt/equity
 Debt/EBITDA
 EBIT/interest (interest coverage)

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  Dupont analysis – a combination of ratios, often referred to as the pyramid of ratios,
including leverage and liquidity analysis

Figure 6: Leverage Analysis

4. Growth Rates

Analyzing historical growth rates and projecting future ones are a big part of any financial
analyst’s job. Common examples of analyzing growth include:

 Year-over-year (YoY)
 Regression analysis
 Bottom-up analysis (starting with individual drivers of revenue in the business)
 Top-down analysis (starting with market size and market share)
 Other forecasting methods

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 Figure 7: Growth Rates

5. Profitability Analysis

Profitability is a type of income statement analysis where an analyst assesses how attractive the
economics of a business are. Common examples of profitability measures include:

 Gross margin
 EBITDA margin
 EBIT margin
 Net profit margin

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 Figure 8: Profitability Analysis
6. Liquidity Analysis

This is a type of financial analysis that focuses on the balance sheet, particularly, a company’s
ability to meet short-term obligations (those due in less than a year). Common examples of
liquidity analysis include:

 Current ratioAcid test

 Cash ratio
 Net working capital

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 Figure 9: Liquidity Analysis

7. Efficiency Analysis

Efficiency ratios are an essential part of any robust financial analysis. These ratios look at how
well a company manages its assets and uses them to generate revenue and cash flow.

Common efficiency ratios include:

 Asset turnover ratio

 Fixed asset turnover ratio

87
  Cash conversion ratio
 Inventory turnover ratio

Figure 10: Efficiency Analysis

8. Cash Flow

As they say in finance, cash is king, and, thus, a big emphasis is placed on a company’s ability to
generate cash flow. Analysts across a wide range of finance careers spend a great deal of time
looking at companies’ cash flow profiles.

The Statement of Cash Flows is a great place to get started, including looking at each of the three
main sections: operating activities, investing activities, and financing activities.

88
Common examples of cash flow analysis include:

 Operating Cash Flow (OCF)

 Free Cash Flow (FCF)
 Free Cash Flow to the Firm (FCFF)
 Free Cash Flow to Equity (FCFE)

Figure 11: Cash Flow

9. Rates of Return

At the end of the day, investors, lenders, and finance professionals, in general, are focused on
what type of risk-adjusted rate of return they can earn on their money. As such, assessing rates of
return on investment (ROI) is critical in the industry.

Common examples of rates of return measures include:

89
  Return on Equity (ROE)
 Return on Assets (ROA)
 Return on Invested Capital (ROIC)
 Dividend Yield
 Capital Gain
 Accounting Rate of Return (ARR)
 Internal Rate of Return (IRR)

Figure 12: Rates of Return

10. Valuation Analysis

The process of estimating what a business is worth is a major component of financial analysis,
and professionals in the industry spend a great deal of time building financial models in Excel.
The value of a business can be assessed in many different ways, and analysts need to use a
combination of methods to arrive at a reasonable estimation.

Approaches to valuation include:

90
  Cost Approach
o The cost to build/replace
 Relative Value (market approach)
o Comparable company analysis
o Precedent transactions
 Intrinsic Value
o Discounted cash flow analysis

Figure 13: Valuation Analysis

11. Scenario & Sensitivity Analysis

Another component of financial modeling and valuation is performing scenario and sensitivity
analysis as a way of measuring risk. Since the task of building a model to value a company is an
attempt to predict the future, it is inherently very uncertain.

Building scenarios and performing sensitivity analysis can help determine what the worst-case or
best-case future for a company could look like. Managers of businesses working in financial

91
planning and analysis (FP&A) will often prepare these scenarios to help a company prepare its
budgets and forecasts.

Investment analysts will look at how sensitive the value of a company is as changes in
assumptions flow through the model using Goal Seek and Data Tables.

Figure 14: Scenario & Sensitivity Analysis

12. Variance Analysis

Variance analysis is the process of comparing actual results to a budget or forecast. It is a very
important part of the internal planning and budgeting process at an operating company,
particularly for professionals working in the accounting and finance departments.

92
The process typically involves looking at whether a variance was favorable or unfavorable and
then breaking it down to determine what the root cause of it was. For example, a company had a
budget of $2.5 million of revenue and had actual results of $2.6 million. This results in a $0.1
million favorable variance, which was due to higher than expected volumes (as opposed to
higher prices).

Figure 15: Variance Analysis

4.1.1 Importance of Financial Analysis

Financial analysis serves as the foundation for strategic planning and informed decision-making
in any organization. It allows companies to measure financial stability, assess risk, monitor
profitability, and evaluate resource efficiency. Investors rely on it to understand return potential,

93
while lenders assess a company’s repayment ability. For management, it acts as a mirror to
reflect internal strengths and gaps.

In today's fast-changing business landscape, financial analysis also helps organizations prepare
for economic uncertainty, competitive pressure, and regulatory changes. For NBFCs like Bajaj
Finance Ltd., financial analysis becomes even more important as it helps evaluate capital
adequacy, asset quality, liquidity, and solvency — which are all critical for sustaining operations
in a credit-driven environment.

4.1.2 Objectives of Financial Analysis in This Project

1. To analyze the financial performance of Bajaj Finance Ltd. over the five-year period
from FY 2020 to FY 2024.
2. To evaluate the company’s profitability, liquidity, solvency, and efficiency using relevant
financial ratios and tools.
3. To identify growth trends, financial risks, and operational strengths through horizontal
and vertical analysis.
4. To apply financial models to interpret Bajaj Finance's financial structure and suggest
improvements if needed.

4.1.3 Limitations of Financial Analysis

1. Historical Data Dependence

o Financial analysis is based on past data, which may not fully reflect the current or
future financial position of the company.

94
 2. Ignores Qualitative Factors
o Aspects like management quality, brand reputation, employee morale, and
customer satisfaction are not captured in numerical analysis.
3. Accounting Policy Differences
o Companies may use different accounting methods, making it difficult to compare
financial results accurately across firms.
4. External Factors Are Overlooked
o Macro-economic changes, policy shifts, regulatory changes, or unforeseen market
disruptions are not directly reflected in financial statements.
5. Window Dressing Possibility
o Financial statements can sometimes be manipulated to present a better picture,
which may mislead the analysis.
6. No Forward-Looking Insight Alone
o While analysis helps understand trends, it does not independently forecast the
future without additional modeling or assumptions.

4.1.4 Tools and Techniques Used

This project relies primarily on secondary data extracted from Bajaj Finance’s audited annual
reports. The financial statements are analyzed using Excel to perform:

95
  Ratio analysis for profitability, liquidity, solvency, and efficiency
 Horizontal analysis to compare financial data over time
 Vertical/common-size analysis to evaluate internal structure
 Trend charts to visually represent growth patterns
 DuPont analysis to break down ROE
 Cash flow analysis to assess liquidity and financial flexibility

These techniques help transform numerical data into insights, making it easier to evaluate Bajaj
Finance’s overall performance.

4.1.5 Applicability to Bajaj Finance and the NBFC Sector

This financial analysis study holds particular significance due to its focus on Bajaj Finance Ltd.,
one of India’s leading Non-Banking Financial Companies (NBFCs). NBFCs play a crucial role
in extending credit to underserved segments and supporting economic growth. Given the highly
regulated and capital-intensive nature of this sector, it becomes essential to assess an NBFC's
financial stability through structured analysis. By evaluating the company’s profitability,
solvency, liquidity, and efficiency over a five-year period, this project provides insights into how
effectively Bajaj Finance has managed financial risks, optimized its resources, and sustained
growth.

4.2 Rationale of the Study

Financial analysis serves as a crucial instrument for assessing the overall financial health and
performance of a business. In the current fast-paced financial landscape, particularly within the
non-banking financial sector, companies are encountering heightened scrutiny from regulators,
96
investors, and customers. Bajaj Finance Ltd., recognized as one of India’s largest and most
influential NBFCs, offers an exemplary case for an in-depth financial analysis.

The rationale for selecting this topic stems from the growing significance of data-driven financial
decision-making, particularly in the aftermath of COVID-19, during which companies faced
uncertainties, credit risks, liquidity challenges, and compliance issues. By examining Bajaj
Finance over the last five years (2020–2024), this study aims to uncover how the company has
managed these challenges and whether its financial strategies have secured long-term
sustainability.

This project is also pertinent in light of the RBI’s regulatory tightening for NBFCs, the rise of
digitalization, and the evolving behavior of customers. Analyzing critical financial indicators
such as profitability ratios, liquidity status, solvency measures, capital adequacy, and asset
quality provides a more profound understanding of the company's operational and financial
resilience.

From both a personal and academic perspective, this study presents an opportunity to apply
theoretical financial concepts — including ratio analysis, trend analysis, and cash flow
interpretation — within a real-world corporate framework. It not only enriches practical financial
knowledge but also fosters the development of analytical skills essential for future positions in
financial services or corporate finance. Investors, to evaluate the performance and future
prospects of Bajaj Finance. Outcomes:

 Lenders and regulators, to comprehend the company’s capital adequacy and financial
risks;
 Academicians and students, to acquire real-time insights into the operational dynamics of
NBFCs in a competitive environment. Thus, the study bridges the gap between academic
learning and real-world financial evaluation, while contributing meaningful insights on
one of India’s top-performing NBFCs.

4.3 Research Problem

97
Over the last ten years, the Non-Banking Financial Companies (NBFC) sector has become a
crucial component of India’s financial framework, playing a significant role in credit distribution
across both urban and rural regions.
Among these entities, Bajaj Finance Ltd. has established itself as a prominent player, boasting a
varied lending portfolio and robust financial results. Nevertheless, the growing intricacy of
financial markets, evolving regulatory environments, and intensifying competition have
prompted inquiries regarding the sustainability and robustness of the financial fundamentals of
NBFCs.

In light of the company’s swift growth, it is vital to critically assess whether this expansion is
underpinned by a solid financial foundation. It is necessary to evaluate how effectively Bajaj
Finance oversees essential financial elements such as profitability, liquidity, solvency, capital
adequacy, and asset quality over time. While annual reports provide data and commentary, a
systematic analysis employing financial ratios and trend assessments over several years is
required to derive meaningful insights and comparisons.

Consequently, the research issue focuses on determining how well Bajaj Finance Ltd. has
performed financially over a five-year span, and whether this performance indicates long-term
sustainability and operational efficiency amidst economic, competitive, and regulatory hurdles.
Additionally, it seeks to assess whether the company’s financial strategies are in alignment with
its growth path and whether it serves as a benchmark for other NBFCs within the sector.

4.4 Identification of Research Gap

98
In recent years, a multitude of studies have been undertaken regarding the financial performance
of Indian Non-Banking Financial Companies (NBFCs), primarily concentrating on sector-wide
challenges, regulatory reforms, and risk exposure. Nevertheless, many of these studies offer a
broad or comparative analysis of various NBFCs and lack detailed, company-specific evaluations
that extend over multiple financial years. While analysts and market reports often highlight the
performance of Bajaj Finance Ltd., much of this information is fragmented, geared towards
investors, or confined to short-term quarterly updates rather than long-term trends.

Academic research that specifically examines a five-year financial ratio analysis of Bajaj Finance
Ltd., encompassing a diverse array of indicators such as profitability, liquidity, solvency, capital
adequacy, and asset quality, remains relatively scarce. Additionally, the changing financial
landscape post-COVID has introduced new financial dynamics that have yet to be thoroughly
explored in academic research.

Most prior research has not effectively linked ratio analysis with strategic financial interpretation
—such as how specific shifts in profitability or leverage reflect the company's operational
decisions, growth strategies, or risk management capabilities.

Consequently, this study aims to address this gap by:

 Conducting a thorough financial analysis over a five-year period for Bajaj Finance Ltd.

 Interpreting the findings within the context of industry practices, economic trends, and
company-specific strategies.

 Offering an analytical framework that could act as a benchmark for future studies on
individual NBFCs.

4.5 Literature Review

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1. The Non-Banking Financial Companies (NBFCs) in India have experienced significant shifts
in recent years. While they have emerged as strong competitors to traditional banks, they have
also increasingly served as valuable complements to the banking system. Even before the onset
of the COVID-19 pandemic, NBFCs were already grappling with a liquidity crisis, prompting
many to explore alternative revenue streams as their primary operations—mainly loans and
credit disbursements—faced challenges. The pandemic further intensified these difficulties,
severely affecting the overall economy, including the NBFC sector. This study aims to examine
the impact of the COVID-19 crisis on NBFCs in India. It evaluates their performance before and
after the pandemic using indicators such as Compound Annual Growth Rate (CAGR),
profitability ratios, and analyzes the evolving business models adopted to navigate the ongoing
economic uncertainties. (Khatri & Modi, 2022)

2. Leverage analysis serves as an essential financial tool for assessing a company’s efficiency in
utilizing both debt and equity to enhance profitability. This research investigates the effect of
leverage on the profitability of Bajaj Finance, Nagpur, through the evaluation of key financial
ratios, including operating leverage, financial leverage, and combined leverage. The study aims
to explore how leverage impacts key profitability indicators such as Return on Equity (ROE) and
Return on Assets (ROA), thereby influencing the company's overall financial health. By
analyzing historical financial data, the research identifies significant trends and potential risks
associated with leverage. The results offer valuable insights into determining the optimal level of
leverage necessary for long-term growth and financial resilience. These findings are particularly
beneficial for investors, analysts, and policymakers seeking to make well-informed decisions
regarding leverage strategies and profitability improvement in financial institutions. (Bhovate,
2025)

3. The study “A Study on Financial Statement Analysis of HDFC Bank” aims to evaluate the
bank’s financial performance and position from 2020 to 2024 through its financial statements.
By analyzing the cash flow, income statement, and balance sheet, the study assesses profitability,
liquidity, solvency, and efficiency using key ratios like debt-equity, capital adequacy, EPS, ROE,
and current ratio. Tools such as trend analysis, common-size statements, and comparative
analysis provide deeper insights. Despite economic disruptions like the pandemic, HDFC Bank
has shown strong performance, driven by sound risk management and operational efficiency.

100
The study concludes with key findings and suggestions, offering a valuable tool for identifying
financial strengths and areas for improvement.(Surisriviswa Kiran & Dr.K.Pushpa Latha, 2025)

4. Lending is a vital function of the financial sector, particularly for banks and NBFCs in India,
serving as their primary source of revenue. These financial institutions raise funds from the
market—through other institutions and the public—and then lend them to clients to generate
profits for their investors. Prior to the 2019 merger announcements by the Government of India,
there were 27 public sector banks, including SBI associate banks. In addition, several private
sector banks, NBFCs, cooperative banks, and regional rural banks are included in this study. In
recent years, the lending activities of banks and NBFCs have experienced a slowdown,
accompanied by a continuous rise in Non-Performing Assets (NPAs). This growing NPA issue
poses serious challenges not only to the financial sector but also to the broader economy. This
paper aims to systematically review existing literature and studies on NPAs in India, identify the
key factors contributing to their rise, and explore potential areas for further research on the
subject.(Et. Al., 2021)

5. This study concentrates on two vital aspects of financial health: capital adequacy and asset
quality. Capital adequacy, assessed using Basel III guidelines, the Debt-to-Equity Ratio (DER),
and the Leverage Ratio (LR), plays a key role in determining a bank’s ability to withstand
financial stress. Asset quality, measured through indicators such as Gross NPA, Net NPA, and
the Total Investments to Total Assets (TITA) ratio, reflects the effectiveness of a bank’s risk
management and the quality of its loan assets. The research evaluates the financial performance
of selected Public Sector Banks (PSBs) in India over the period 2019 to 2024. By analyzing
these ratios, the study offers insights into how these banks have responded to regulatory
requirements, managed non-performing assets, and maintained financial stability.(R & G R,
2025)

6. Financial statements are fundamental to the functioning of any business, serving as a key
source of information for assessing its performance, financial health, and ability to sustain
operations over time. This study highlights the importance of financial statement analysis from
both theoretical and practical perspectives. It aims to explore the various methods and techniques
used to analyze financial data in order to evaluate a business's current position, profitability,

101
future earning potential, and capacity to meet financial obligations. Such analysis is essential for
projecting and forecasting the future outlook of a business entity.(Singh, 2016)

7. NBFCs support the banking sector by meeting the financial needs of corporates, small
borrowers, and the unorganized sector. Known as shadow banks, they function like banks but
with fewer regulations and mainly raise funds through bonds or bank borrowings. Classified into
Asset Finance, Investment Finance, and Loan Companies, NBFCs offer structural flexibility.
This study evaluates the financial performance of selected NBFCs from 2017 to 2021 using
indicators like EPS, Net Profit, Debt-to-Equity, ROE, and P/E Ratio. Trend and correlation
analyses were conducted using SPSS v20. The results show that Muthoot Finance and Bajaj
Finance performed well, supporting business growth and shareholder value.(Raj Prajapati et al.,
2022)

8. This study evaluates the financial performance of the Jordanian Arab Commercial Bank from
2000 to 2009 using the DuPont analysis, which breaks down Return on Equity (ROE) into net
profit margin, asset turnover, and equity multiplier. Arab Bank, a major financial institution in
the Middle East, faced continued challenges from the global financial crisis. The analysis reveals
that the bank’s ROE remained relatively stable with minimal fluctuations. Both net profit margin
and asset turnover showed consistent performance from 2001 to 2009. The equity multiplier
remained steady from 2001 to 2005 but declined from 2006 to 2009, indicating a reduction in
financial leverage and a decreased reliance on debt to finance assets.(Almazari, 2012)

9. NBFCs are increasingly emerging as a viable alternative to traditional banking and have
become a vital part of the Indian financial system. They play a significant role in supporting the
government’s financial inclusion initiatives by extending credit to underserved and unbanked
regions. Although India’s financial system is largely bank-dominated, NBFCs are now actively
competing with banks and complementing other financial institutions. This study compares the
growth and performance of NBFCs with that of banks and evaluates their contribution to the
Indian economy. Using secondary data and basic statistical tools, the findings reveal that
between 2006 and 2013, NBFCs experienced a faster growth in total assets compared to banks,
and their contribution to India’s GDP showed a more consistent upward trend. (Performance and
Growth of Non-Banking Financial Companies as Compared, n.d.)

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10. Non-Banking Financial Institutions (NBFIs) have recently gained significant prominence by
offering equity-based and risk-based financial products across various sectors. NBFCs, in
particular, are emerging as strong alternatives to traditional banks and have become a key
component of India’s financial system. They play an important role in promoting financial
inclusion by extending credit to retail customers in areas with limited or no access to formal
banking. Many such borrowers later become eligible for banking services due to their credit
history with NBFCs. Currently, NBFCs are at a crucial juncture, as the Reserve Bank of India
has introduced a revised regulatory framework aimed at aligning them more closely with banks
and addressing regulatory gaps. Hence, analyzing the performance of NBFCs has become
increasingly important. (Performance_Analysis_of_Non_Banking_Fina, n.d.)

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4.6 Research Objectives

To evaluate the comprehensive financial performance of Bajaj Finance Ltd. over a five-year
timeframe (FY 2019–20 to FY 2023–24) utilizing essential financial ratios and metrics.

To assess the profitability status of the company through ratios including Net Profit Margin,
Return on Assets (ROA), Return on Equity (ROE), and Net Interest Margin (NIM).

To investigate the liquidity and solvency conditions of the company by employing indicators
such as Current Ratio, Interest Coverage Ratio, and Debt-to-Equity Ratio.

To analyze the capital adequacy and asset quality of Bajaj Finance Ltd. using the Capital
Adequacy Ratio (CAR), Net NPA Ratio, and Proprietary Ratio.

To interpret the trends and patterns in the financial health of the company concerning external
factors like market conditions and regulatory changes.

To compare the performance of Bajaj Finance with other prominent NBFCs in specific areas to
ascertain its relative financial strength and efficiency.

To offer recommendations and insights derived from the analysis that may assist stakeholders in
understanding the financial strengths, weaknesses, and future outlook of the company.

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 CHAPTER 5
DIAGONSIS OF THE PROBLEM/SITUATION

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5.1 Finding Alternatives of the situation

The thorough financial assessment of Bajaj Finance Ltd., in comparison with M&M Financial
Services and Shriram Finance Ltd., indicates that Bajaj Finance consistently excels beyond its
competitors in key financial indicators. It upholds robust profitability, outstanding asset quality,
and operational efficiency. Nevertheless, in a competitive and dynamic NBFC environment,
ongoing enhancement is crucial. This section delineates strategic options that Bajaj Finance may
consider to further bolster its financial resilience and growth trajectory. A significant focus area
is funding diversification. While the company maintains a sound debt-to-equity ratio, it still
depends significantly on market borrowings. To mitigate funding risk and enhance cost
efficiency, Bajaj Finance could contemplate:

 Increasing the proportion of retail fixed deposits and low-cost institutional borrowing
 Accessing refinancing options from SIDBI, NABARD, or NHB
 Investigating Tier II capital instruments or perpetual bonds to augment its capital base.

Another critical factor is the Asset Turnover Ratio, which has hovered around 0.15 over the past
five years. Although this is standard for NBFCs, there is room for improvement. The company
might:

 Introduce shorter-tenure, high-frequency loans to enhance asset rotation

 Broaden digital lending platforms to decrease processing time and improve utilization.

Despite its strong profitability, Bajaj Finance's Interest Coverage Ratio (ICR) has remained
below 2.5, indicating potential for enhancing earnings coverage. To improve ICR, the company
could:

 Refinance older high-cost borrowings

 Augment high-yield loan segments or secured lending to increase interest margins
 Generate additional fee-based income through cross-selling financial products.

Bajaj Finance must also keep a close watch on its Capital Adequacy Ratio (CAR), which,
although robust, has exhibited a declining trend. To manage this effectively:

 Plan capital infusions through retained earnings or hybrid securities

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  Balance growth across low- and high-risk segments to manage risk-weighted assets.

From an operational perspective, the company has the opportunity to further decrease its
Operating Expenses to AUM Ratio by:

 Digitizing comprehensive operations (including loan processing, servicing, and

collections)
 Integrating AI and automation into customer profiling and underwriting processes.

Furthermore, while Bajaj Finance upholds a low Net NPA Ratio, there are still risks associated
with newer lending segments. To ensure asset quality, the company might consider:

 Employing advanced credit scoring and behavioral analytics for evaluating borrowers.
 Expanding lending into secured and low-default sectors such as MSME or gold loans.

5.2 Suggestive Measures to Overcome the Problem

🔹 Enhance Interest Coverage:

Bajaj Finance has the opportunity to refinance existing debts and boost revenue from high-yield
offerings to fortify its capacity to meet interest obligations.

🔹 Boost Asset Turnover:

The introduction of quicker loan products and the minimization of disbursement times via digital
platforms can enhance asset efficiency.

🔹 Broaden Funding Sources:

The organization can secure additional capital through retail fixed deposits and long-term loans
to lessen reliance on short-term market financing.

🔹 Uphold Capital Adequacy:

To facilitate future expansion, Bajaj Finance must persist in overseeing its capital structure and
cautiously increase lending.

🔹 Manage Operating Expenses:

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Leveraging technology and automation can further decrease operational expenditures and
enhance the cost-to-income ratio.

🔹 Preserve Asset Quality:

The firm should maintain rigorous credit assessments and investigate more secured lending options to
keep non-performing assets (NPAs) at a minimum.

5.3 Key Findings

Bajaj Finance Ltd. demonstrated robust profitability, consistently achieving high Net Profit
Margin and Return on Equity (ROE) over a five-year period.

Its Interest Coverage Ratio and Asset Turnover Ratio remained stable, although there is potential
for enhancement when compared to other financial metrics.

The company upheld outstanding asset quality, boasting the lowest Net Non-Performing Asset
(NPA) Ratio among the three Non-Banking Financial Companies (NBFCs).

The Capital Adequacy Ratio (CAR) consistently exceeded the regulatory minimum, despite a
slight downward trend attributed to aggressive expansion.

Liquidity and solvency were effectively managed, as evidenced by its strong Current Ratio and
moderate Debt-to-Equity ratios.

Operating efficiency was commendable, as indicated by a low Cost-to-Income Ratio and well-
regulated Operating Expenses relative to Assets under Management (AUM).

5.4 Suggestions

✅ Refinance existing loans to alleviate interest pressure and enhance interest coverage.

✅ Implement short-term loan offerings to boost asset turnover ratio and revenue generation.

✅ Broaden the low-cost deposit base to lessen dependence on market borrowings and enhance
liquidity.

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✅ Leverage digital tools and automation to further decrease operating costs and enhance
efficiency.

✅ Uphold robust asset quality by reinforcing credit assessments and diversifying into secured
lending.

5.5 Limitations of the Study

🔸 This research relies on secondary data sourced from annual reports and financial statements; no
primary data has been utilized.

🔸 The analysis is confined to five financial years (FY 2019–20 to FY 2023–24), which may not
adequately reflect long-term trends.

🔸 The comparison is limited to three NBFCs (Bajaj Finance Ltd., M&M Financial Services, and
Shriram Finance Ltd.), which may not provide a comprehensive view of the entire NBFC sector.

🔸 The study emphasizes quantitative ratios exclusively; qualitative aspects such as management
strategy, customer satisfaction, and market perception are excluded.

🔸 Owing to constraints in time and resources, the study does not encompass forecasting or
sophisticated statistical models.

🔸 Certain ratios (for instance, Net NPA to Net Advances) were extracted directly from annual
reports rather than being manually calculated due to insufficient detailed data.

5.6 Contribution of the Study

This research enhances the comprehension of the financial performance of Non-Banking

Financial Companies (NBFCs), particularly focusing on Bajaj Finance Ltd. It presents a
systematic financial analysis utilizing key ratios over a five-year timeframe, which aids in
recognizing both strengths and areas needing improvement. The study acts as a practical
application of theoretical knowledge acquired in financial analysis courses and offers significant
value to students, researchers, and academics by connecting theoretical frameworks to actual
corporate data. Additionally, it delivers valuable insights for prospective investors and financial
analysts who are keen on assessing the financial stability of NBFCs through a ratio-based

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approach. In summary, the study promotes financial literacy and analytical capabilities within the
academic sphere.

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Annexures

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