On this page ▾
Today's prices ask more of Bajaj Finance than of HDFC Bank.
At current prices, buyers of Bajaj Finance are assuming about 24.6% return on equity against 20.1% in its own record; for HDFC Bank it is 15.0% against 15.1%. That shows which share needs more to go right — not which is cheaper. How far each trades from its estimated fair value is in the full valuations.
- Valuation method: Bajaj Finance on excess return; HDFC Bank on excess return.
- Size: HDFC Bank is worth about 1.9 times Bajaj Finance on the stock market.
- Record: On revenue the two have grown at much the same pace: Bajaj Finance compounded at about 21% a year (FY2020–FY2026) and HDFC Bank at about 22% (FY2019–FY2026).
- What to watch: return on equity at Bajaj Finance; return on equity at HDFC Bank.
| Bajaj Finance | HDFC Bank | |
|---|---|---|
| Price | ₹1,079 | ₹807 |
| Market cap | ₹6.71L Cr | ₹12.44L Cr |
| P/E | 30.9 | 15.5 |
| P/B | 5.89 | 2.14 |
| Fair value 🔒 sign in | ₹0,000 | ₹0,000 |
| Upside 🔒 sign in | +00% | +00% |
| Valued on | Excess return | Excess return |
01Two businesses
A lender built on the EMI
Bajaj Finance is India's largest non-bank consumer lender and part of the Bajaj Finserv group. It made its name financing consumer durables at the point of sale — the EMI on a phone or a fridge — and has grown into personal loans, small-business loans, loans against property, gold loans and, through its listed subsidiary Bajaj Housing Finance, home loans.
India's largest private bank, reshaped by a merger
HDFC Bank is India's largest private-sector bank, built on retail lending, low-cost current and savings deposits and a long record of keeping bad loans low. In July 2023 it merged with HDFC Ltd, the housing-finance company that founded it, adding a large home-loan book and bringing the group's life insurer, general insurer and asset manager under the bank.
02The records side by side
On revenue the two have grown at much the same pace: Bajaj Finance compounded at about 21% a year (FY2020–FY2026) and HDFC Bank at about 22% (FY2019–FY2026). By revenue, HDFC Bank is about 6.0 times the size of Bajaj Finance. Bajaj Finance kept 23.6% of revenue as net profit in FY2026; HDFC Bank kept 15.3% of revenue as net profit in FY2026.
Full ten-year tables and charts are on each company's page: Bajaj Finance · HDFC Bank.
03What each price assumes
Work backwards from each share price and you can see what buyers are taking for granted — the rate each company must sustain to justify what it costs, against what its own record supports.
04What decides each one's value
- Return on equityThe premium only holds if returns stay well above the cost of equity. The figure in 'What each price assumes' shows the return today's price needs.
- Loan growthValue compounds with the book. A slowdown in growth hits a premium lender harder than a cheaply priced one.
- Return on equityA bank is worth more than its book only to the extent it earns above its cost of equity. The 'what each price assumes' figure above shows how much return today's price already takes for granted.
- Deposit growthHow fast it gathers cheap deposits sets how fast it can lend without pushing up its funding costs.
05What could go wrong
- Regulatory tighteningThe RBI has raised capital requirements on unsecured consumer lending and acted against specific Bajaj Finance products in November 2023.
- A consumer-credit downturnRising defaults among stretched borrowers would hit provisions and growth together.
- Slower growth for longerIf the deposit catch-up takes longer, loan growth stays below its historical pace.
- Interest-rate cutsFalling rates can squeeze lending margins before deposit costs adjust.
06Which is better value?
Sign in free to see which trades further below its worth
- ✓Both fair values per share — each on the method that fits the business
- ✓Every step of both workings — growth, margins and cost of capital, with sources
- ✓Bull, base and bear cases — for each company
- ✓Downloadable reports — the full write-up for each, yours to keep
08Questions people ask
Is Bajaj Finance or HDFC Bank better value?
That turns on how far each share trades from its estimated fair value. Both figures, with every step of the working, are in the full valuations, free to view once you sign in. On the public numbers, Bajaj Finance trades at 30.9 times earnings and 5.89 times book value, and HDFC Bank at 15.5 times earnings and 2.14 times book value — but multiples alone mislead when two businesses work differently, which is why each is valued on the method that fits it.
What is the difference between Bajaj Finance and HDFC Bank?
Bajaj Finance is India's largest non-bank consumer lender and part of the Bajaj Finserv group. HDFC Bank is India's largest private-sector bank, built on retail lending, low-cost current and savings deposits and a long record of keeping bad loans low.
Are Bajaj Finance and HDFC Bank valued the same way?
No. Bajaj Finance is valued on excess return and HDFC Bank on excess return, because forcing one model onto both would misstate at least one of them.
What does today's price assume for Bajaj Finance and HDFC Bank?
Worked backwards from the share price, Bajaj Finance needs about 24.6% return on equity and HDFC Bank about 15.0% return on equity, against 20.1% and 15.1% in their own records.