A valuation of Bajaj Finance (BAJFINANCE) built from its filed accounts — ten years of results, the method that fits this business, and what today's price already assumes.
Worked backwards from today's share price: the ROE Bajaj Finance must sustain to justify what it costs, against what its own record supports.
At the current price the market requires a sustainable ROE of ~25.3% (vs the ~19.6% the history supports). That implied ROE is well above Ke — a durable high-return franchise is already in the price. Equivalently, holding ROE at 19.6%, the price is fair only at a cost of equity of ~10.3% (model uses 12.7%).
Revenue and earnings per share in ₹, return on equity and leverage as ratios — all from the filed statements.
Revenue and net profit as filed, in ₹ crore.
| Year | Revenue | Net profit | Margin |
|---|---|---|---|
| Mar 2017 | 9,970 | 1,836 | 18.4% |
| Mar 2018 | 12,746 | 2,496 | 19.6% |
| Mar 2019 | 18,487 | 3,995 | 21.6% |
| Mar 2020 | 26,375 | 5,264 | 20.0% |
| Mar 2021 | 26,673 | 4,420 | 16.6% |
| Mar 2022 | 31,633 | 7,028 | 22.2% |
| Mar 2023 | 41,411 | 11,508 | 27.8% |
| Mar 2024 | 54,972 | 14,451 | 26.3% |
| Mar 2025 | 68,832 | 16,779 | 24.4% |
| Mar 2026 | 81,985 | 19,332 | 23.6% |
A lender is not valued with a discounted cash flow. Borrowing is the raw material of the business and interest is operating income, so enterprise value means nothing here. It is valued on excess return instead — the profit it earns above the cost of the equity funding it.
Excess return — the correct lens for an NBFCThe same valuation, run side by side.
Bajaj Finance vs Bajaj FinservThe parent holding company — the same franchise, valued differently.→Bajaj Finance vs HDFC BankA lender with deposits against one funded in the wholesale market.→Bajaj Finance vs Cholamandalam FinanceThe closest listed NBFC comparison on mix and growth.→At ₹1,141 the market is pricing in roughly 25.3% sustained ROE, against the ~19.6% its own record supports. That is more than it has delivered, so the price is justified only if the business can hold a rate it has not previously sustained.
It is computed from the filed financial statements using the method that fits this business (excess return), with every assumption shown alongside the result. The per-share figure and the full working are in the report.
A price-to-earnings of 34.7 and price-to-book of 6.23 sit against a return on equity of 18.2%. Whether that multiple is deserved depends on how durable the return is — which is exactly what the valuation tests.
Revenue went from ₹0.10 lakh crore to ₹0.82 lakh crore over the period shown, while return on equity moved from 19.6% to 17.9%. Growing scale on a rising return is a very different proposition from growing scale on a falling one.
The dividend yield is 0.47%, so effectively the entire return has to come from the share price.
Debt to equity stands at 3.82, down from 5.13 at the start of the period — the balance sheet is a core input to the cost of capital used here.
From published financial statements. The method is chosen to fit the business — a bank on excess return, a regulated utility on its rate base, a conglomerate by its parts — and every assumption is shown with its source. When the numbers do not support a call, no call is published.
A cost of capital of 12.74%, growth drawn from the company's own record rather than from guidance, and the valuation method that fits the business. All of them are listed in the report, with how much each one moves the answer.