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Today's prices ask more of Bajaj Finance than of State Bank of India.
At current prices, buyers of Bajaj Finance are assuming about 24.9% return on equity against 20.1% in its own record; for State Bank of India it is 14.8% 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: Bajaj Finance on excess return; State Bank of India on excess return.
- Size: State Bank of India is worth about 1.4 times Bajaj Finance on the stock market.
- Record: Bajaj Finance has grown revenue faster: Bajaj Finance compounded at about 21% a year (FY2020–FY2026) and State Bank of India at about 12% (FY2019–FY2026).
- What to watch: return on equity at Bajaj Finance; return on equity versus its own history at State Bank of India.
| Bajaj Finance | State Bank of India | |
|---|---|---|
| Price | ₹1,117 | ₹1,080 |
| Market cap | ₹6.95L Cr | ₹9.97L Cr |
| P/E | 32.0 | 11.0 |
| P/B | 6.10 | 1.62 |
| 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.
The bank the whole country runs on
State Bank of India is the country's largest bank by deposits, loans, branches and customers, and it is majority-owned by the Government of India. It lends to everyone from farmers and home buyers to the largest corporates, and its group includes SBI Life, SBI Card, the SBI Mutual Fund asset manager and SBI General Insurance.
02The records side by side
Bajaj Finance has grown revenue faster: Bajaj Finance compounded at about 21% a year (FY2020–FY2026) and State Bank of India at about 12% (FY2019–FY2026). By revenue, State Bank of India is about 8.7 times the size of Bajaj Finance. Bajaj Finance kept 23.6% of revenue as net profit in FY2026; State Bank of India kept 12.0% of revenue as net profit in FY2026 — a sign of very different business models.
Full ten-year tables and charts are on each company's page: Bajaj Finance · State Bank of India.
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 equity versus its own historySBI's value depends on whether recent returns hold through a full credit cycle — something it has not shown before.
- Credit costsBecause the book is so large, even a modest rise in fresh bad loans would show up quickly in profit.
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.
- A turn in corporate creditSBI's history shows how fast large-company defaults can erase years of profit.
- Staff and pension costsWage settlements at a public-sector bank are less flexible and can lift costs in step.
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 State Bank of India 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 State Bank of India at 11.0 times earnings and 1.62 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 State Bank of India?
Bajaj Finance is India's largest non-bank consumer lender and part of the Bajaj Finserv group. State Bank of India is the country's largest bank by deposits, loans, branches and customers, and it is majority-owned by the Government of India.
Are Bajaj Finance and State Bank of India valued the same way?
No. Bajaj Finance is valued on excess return and State Bank of India 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 State Bank of India?
Worked backwards from the share price, Bajaj Finance needs about 24.9% return on equity and State Bank of India about 14.8% return on equity, against 20.1% and 16.1% in their own records.