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The market asks roughly as much of Bajaj Finance as of Shriram Finance.
At current prices, buyers of Bajaj Finance are assuming about 24.9% return on equity against 20.1% in its own record; for Shriram Finance it is 20.3% against 16.1%. 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: both on excess return.
- Size: Bajaj Finance is worth about 3.0 times Shriram 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 Shriram Finance at about 19% (FY2020–FY2026).
- What to watch: return on equity at Bajaj Finance; return on equity at Shriram Finance.
| Bajaj Finance | Shriram Finance | |
|---|---|---|
| Price | ₹1,117 | ₹970 |
| Market cap | ₹6.95L Cr | ₹2.28L Cr |
| P/E | 32.0 | 18.0 |
| P/B | 6.10 | 3.46 |
| 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.
Lending to India's truck owners
Shriram Finance was formed in December 2022 by merging Shriram Transport Finance and Shriram City Union Finance. It is India's largest lender for used commercial vehicles, financing truck operators and small transport businesses, many of them first-time borrowers.
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 Shriram Finance at about 19% (FY2020–FY2026). By revenue, Bajaj Finance is about 1.7 times the size of Shriram Finance. Bajaj Finance kept 23.6% of revenue as net profit in FY2026; Shriram Finance kept 20.8% of revenue as net profit in FY2026.
Full ten-year tables and charts are on each company's page: Bajaj Finance · Shriram Finance.
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 equityHigh returns for lending to riskier borrowers.
- Loan growthGrowth in vehicle and small-business lending.
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.
- Freight cycleA slowdown in trucking hits borrowers' ability to repay.
- Credit qualitySmall-business borrowers are vulnerable in downturns.
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 Shriram Finance 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 32.0 times earnings and 6.10 times book value, and Shriram Finance at 18.0 times earnings and 3.46 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 Shriram Finance?
Bajaj Finance is India's largest non-bank consumer lender and part of the Bajaj Finserv group. Shriram Finance was formed in December 2022 by merging Shriram Transport Finance and Shriram City Union Finance.
Are Bajaj Finance and Shriram Finance valued the same way?
Yes — both on excess return, so their workings compare like for like.
What does today's price assume for Bajaj Finance and Shriram Finance?
Worked backwards from the share price, Bajaj Finance needs about 24.9% return on equity and Shriram Finance about 20.3% return on equity, against 20.1% and 16.1% in their own records.