INTRODUCTION

Introduction to internship:
I completed a six-week internship at Bajaj Finserv from May 26th to July 5th, where I dove
into the banking and financial services sector. During this time, I got hands-on experience with
the company’s operations, connected with industry professionals, and gained a richer
understanding of financial products, customer relationship management, and digital financial
solutions. This opportunity let me see firsthand how financial services are provided in a
dynamic and competitive landscape. The main goal of my study is to assess the company’s
profitability and other financial metrics through a thorough Ratio analysis and Altman Z-
score method of its financial statements.

Industry profile: Banking and Financial services.

The banking and financial services sector plays a vital role in the global economy. It provides
essential support to individuals, businesses, and governments. This sector includes various
activities, such as retail and commercial banking, investment banking, wealth and asset
management, insurance, and the fast-growing area of financial technology (fintech).

These services are essential for economic growth because they allow saving, lending, investing,
and managing risk. Commercial banks are the foundation of this sector. They provide services
such as collecting deposits, distributing loans, and processing payments. Investment banks
assist businesses in raising money through shares or bonds and offer advice on mergers and
acquisitions. Asset management firms help individuals and institutions grow their wealth by
investing in markets like stocks, bonds, and real estate. Furthermore, new technology has
greatly changed and improved the financial sector.

Fintech advancements, such as mobile applications, digital wallets, online lending platforms,
and blockchain, have made financial services more convenient, faster, and widely accessible.
At the same time, the industry faces key challenges, including meeting regulatory requirements,
protecting against cyber risks, and maintaining customer trust. As the financial sector continues
to change, it aims to support financial inclusion, strengthen economic stability, and promote
sustainable long-term growth.
Market size of the industry:

As of June 2024, India’s banking landscape features 13 public sector banks, 21 private sector
banks, 44 foreign banks, and 12 small finance banks. The digital banking scene is also
booming, with around 15.17 lakh micro-ATMs currently in operation. On top of that, there are
1,26,772 on-site ATMs and Cash Recycling Machines (CRMs) scattered throughout the
country. In just the first four months of FY23, banks rolled out 2,796 new ATMs, which is a
noticeable increase from 1,486 in FY22 and 2,815 in FY21. A significant shift towards digital
banking is taking place, especially in rural areas, where all new bank accounts are now being
opened online. A report from BCG suggests that by 2026, digital payments are expected to
make up 65% of all transactions, showcasing the swift embrace of digital finance. When it
comes to assets, public sector banks held Rs. 16,12,808 crore (US$ 1,861.72 billion) in 2024,
while private sector banks accounted for Rs. 10,95,245.8 crore (US$ 1,264.28 billion). Public
sector banks represented 59.53% of the total banking assets, which also includes private and
foreign banks. In terms of revenue, public banks generated Rs. 11,09,730 crore (US$ 128.1
billion) in interest income in 2024, while private banks brought in Rs. 8,29,049 crore (US$
95.7 billion) from interest during the same year.
 COMPANY PROFILE

Bajaj Finserv Limited:

The roots of the Bajaj Group’s dedication to social responsibility were planted by its founder,
Mr. Jamnalal Bajaj, long before India achieved independence. A true philanthropist at heart, he
dreamed of building an organization that would put the well-being of society ahead of personal
interests. He strongly believed that the welfare of the community should always come first.
Today, under the guidance of Mr. Rahul Bajaj, along with the active participation of Rajiv Bajaj
and Sanjiv Bajaj, the group continues to positively influence countless lives.

Bajaj Finserv Limited serves as the holding company for the financial services arm of the Bajaj
Group. Founded in 2007 after spinning off from Bajaj Auto, the company has significantly
broadened its reach in India, diving into areas like lending, insurance, wealth management, and
digital financial services. With a network of subsidiaries, Bajaj Finserv offers a wide array of
financial solutions. These range from personal and business loans to investment and savings
products, as well as general insurance for asset protection and life and health insurance aimed
at securing income and family well-being. They also provide retirement planning and savings
options, catering to the diverse financial needs of millions of customers throughout the country.
Embracing digital platforms, Bajaj Finserv has made its services more user-friendly, allowing
customers to manage their finances online with ease.
The lending and investment side of things is managed by Bajaj Finance Limited (BFL), a key
subsidiary that’s publicly traded on both the Bombay Stock Exchange (BSE) and the National
Stock Exchange (NSE). Thanks to a focus on customer satisfaction and a commitment to
innovation, Bajaj Finserv has established itself as a significant player in India’s financial
services sector.

“We truly believe that everyone has just one life to become the best version of themselves”.
Our mission is to support individuals in discovering and unlocking their full potential. To make
this happen, we team up with various institutions and partners, creating a cohesive approach
that ties all our efforts and initiatives together.

Bajaj Financial Holdings Ltd., which is fully owned, has rolled out some fresh business
strategies aimed at boosting its digital and online operations to help grow the group’s financial
services companies. In line with this effort, it has been rebranded as Bajaj Finserv Direct Ltd.
On top of that, the company also has wind energy assets in Maharashtra, boasting a total
installed capacity of 65.2 MW.

One of the standout features of Bajaj Finserv is its strong focus on technology-driven services.
The company has poured significant resources into digital innovation, all aimed at enhancing
the customer experience. With user-friendly mobile apps, streamlined online platforms, and
cutting-edge digital tools, Bajaj Finserv has made it easier than ever to access its financial
products and services. Take the Bajaj Finserv Experia App, for example—it allows users to
manage their loans, make payments, and check account statements effortlessly. Plus, the online
portal simplifies the loan and insurance application process, making financial services more
accessible and convenient for everyone.

Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company
Limited are the result of a partnership between Bajaj Finserv and Allianz SE, a well-respected
name in the world of insurance and asset management. Bajaj Allianz Life Insurance provides a
diverse array of life insurance options, including term insurance, ULIPs (Unit Linked Insurance
Plans), and pension plans, all crafted to cater to the changing needs of customers as they
navigate different phases of life. Meanwhile, Bajaj Allianz General Insurance offers extensive
coverage for health, travel, vehicles, and businesses, ensuring that both individuals and
organizations can protect themselves against unexpected events and financial challenges.
PROMOTERS OF COMPANY:

Bajaj Finserv Limited stands out as a major player in India’s financial services landscape,
proudly part of the esteemed Bajaj Group, which boasts a rich legacy spanning over 90 years.
The company is backed by the Bajaj family, one of India’s most revered industrial dynasties,
known for their significant contributions to business, finance, and social progress. The Bajaj
Group was founded by Jamnalal Bajaj, a freedom fighter and a close ally of Mahatma Gandhi.
He championed the idea of merging business success with social responsibility, a philosophy
that still resonates within the group today.

This commitment to values is carried on by the current generation of the Bajaj family, who
actively lead and manage various companies under the group, including Bajaj Finserv. At the
helm of Bajaj Finserv is Bajaj Holdings & Investment Limited (BHIL), the main promoter that
holds a substantial stake in the company. BHIL, supported by the Bajaj family, serves as the
investment arm of the group. It was established during the 2007 restructuring of Bajaj Auto,
which aimed to separate its automotive and financial operations.

Mr. Sanjiv Bajaj, a fourth-generation member of the family, is currently the Chairman and
Managing Director of Bajaj Finserv. Under his guidance, the company has seen impressive
growth, diversifying its offerings to include lending, insurance, digital finance, and wealth
management.

He is well-regarded for spearheading innovation and digital transformation within the financial
sector. The promoter group, under the stewardship of the Bajaj family, emphasizes strong
governance, ethical practices, and a focus on long-term value creation. They play a crucial role
in strategic decision-making and continue to drive the company’s growth and diversification
across various sectors.

Beyond their business endeavors, the promoters are dedicated to making a social impact
through numerous charitable trusts and foundations. Their initiatives aim to enhance education,
healthcare, rural development, and environmental conservation, showcasing the group’s
commitment to fostering inclusive development.
Quality And Policy:
Bajaj Allianz General Insurance Company Limited (BAGIC) is a collaboration between Bajaj
Finserv Limited and Allianz SE, a well-known global financial services firm from Germany.
The company got its license from the Insurance Regulatory and Development Authority of
India (IRDAI) on May 2, 2001, which paved the way for it to provide general insurance
products throughout India. BAGIC offers a variety of policies, including health insurance,
tailored to meet the diverse protection needs of both individuals and businesses.

On the other hand, Bajaj Allianz Life Insurance Company Limited is a private life insurance
provider in India, also born from the partnership between Bajaj Finserv and Allianz SE. It
kicked off its operations on March 12, 2001, and has since established a solid presence across
the nation. The company boasts a wide range of life insurance solutions aimed at helping
customers with financial planning, long-term savings, and family protection at different stages
of life. Together, both companies leverage Bajaj’s strong local roots and Allianz’s global know-
how to offer innovative and customer-centric insurance services throughout India.

Bajaj Finserv is dedicated to providing top-notch financial solutions by ensuring excellence in

everything they do, from their products and services to their overall operations. The company’s
commitment to quality is anchored in a set of core principles that serve as the backbone of its
quality policy.

Vision And Mission

Vision statement

To promote fair financial practices by maintaining transparency in various financial

production and services offered by the company to deliver an enriching experience.

Mission statement

To offer financial solutions for retail and SME customers through innovation and quality,
while also creating value for stakeholders.

• Deliver excellent customer service.

• Keep communication clear, and follow ethical standards in every interaction with
customers.
• Offer creative financial solutions designed for different groups in society.
• Encourage economic growth through various services and activities.
Services

Consumer Finance

A. Lifestyle Finance: Easy EMI loan options are available for buying home and personal
appliances, groceries, fashion items, travel services, healthcare, and fitness products. These
financing choices offer simple payment plans and make affordable luxury easier to access
without hassle.

B. Digital Product Finance: The Bajaj Finserv EMI Network helps customers buy products
at affordable prices using easy EMIs. With more than 50,000 partner stores, customers can go
to any location, pick from a wide selection of items like electronics, mobiles, and appliances.
They can turn the total cost of their purchase into manageable monthly payments with
assistance from a store representative.

C. Durable Finance: Bajaj Finserv EMI Network provides financing of up to ₹5 lakh for
buying household items like washing machines, refrigerators, air conditioners, LED TVs,
microwaves, and furniture. Customers can get up to 100% funding at little or no interest rates.
They can also pick a repayment period that works for them with easy monthly payments.

Commercial Lending

A. Vendor Financing: Vendor financing helps consumers pay vendors on time, keeping
business operations running smoothly. This option offers access to large loans of up to ₹30
lakh, includes a flexible loan facility, and has a quick approval process with fast disbursal.

B. Large value lease Rental Discounting: Lease Rental Discounting (LRD) is a loan offered
based on rental income from leased properties. Tenants can access this option through lease
agreements, with funding between ₹10 crore and ₹50 crore. The loan usually has a term of up
to 11 years. It also provides options for foreclosure or partial prepayment.

c. Loans against Securities: Loan Against Securities lets individuals access funds without
selling their investments. You can get loans of up to ₹10 crore, and there are no fees for part-
payment or early closure. Customers also get 24/7 help from a dedicated relationship manager
for any questions
 Financial Institutions Lending

Light Engineering Finance: A personal financing option gives customers access to a

significant amount of money. The loan provides funds up to 3.5 ₹ crore to cover personal
expenses such as weddings, home renovations, vacations, and education costs, or to combine
existing debts into one simple loan.

Corporate Finance

Warehouse financing: Warehouse loans assist SME owners in covering their warehouse
needs, whether they need to maintain the right inventory levels or establish a new facility to
access new markets. These loans provide unsecured funding of up to ₹30 lakh, and they come
with straightforward processing and reasonable terms.

SME Finance

A. Home loan: Home loans of up to ₹3.5 crore are available at competitive interest rates.
Borrowers can also enjoy benefits like top-up loans and doorstep service. Under the Pradhan
Mantri Awas Yojana (PMAY), eligible borrowers can get reduced interest rates starting from
6.93%. Other features include easy balance transfer, flexible loan tenure, minimal paperwork,
a property dossier, personalized insurance plans, and quick processing.

B. Loan against Property: Property loans provide financial help to both salaried and self-
employed people. They can be used for different purposes, such as paying for a child's
education, covering wedding expenses, expanding a business, or handling unexpected medical
bills. These loans have low interest rates and can be customized to meet personal needs.

C. Gold Loan: Gold loans are available for salaried individuals, self-employed professionals,
firms, and companies. These loans provide a quick and reliable way to access funds. The
application process is straightforward, with fast approval and dependable financial services.
 Investment

A. Fixed deposit: Fixed Deposits (FDs) are viewed as one of the safest investment choices.
They provide guaranteed returns and flexible investment terms. Investors can choose a duration
from 12 to 60 months, depending on their financial goals. With interest rates reaching 8.70%
and extra benefits for senior citizens, FDs effectively help grow savings. The investment begins
with a minimum deposit of ₹25,000.

B. Mutual fund: Bajaj Finance Mutual Funds offers low risk, high returns, and diversification,
making investment profitable. It includes a small investment option that is professionally managed with
full transparency and interaction. It has low transaction costs and allows investments to be converted to
cash at any time, unless there is a specified lock-in period

Infrastructure Facilities of Bajaj Finserv

The Bajaj Finserv is more focused on the construction of an effective digital and financial inf
rastructure to sustain its varied product and service offerings. The firm employs sophisticated
technology to enhance customer care, organization efficiency, and market expansion. This inv
olves credible digital platforms, safe systems to manage data, and key partnerships that aid in
driving innovation and reach

Digital Infrastructure

Connectivity: Reliable high-speed internet is crucial for effective digital operations and easy
access to online services.

Data Management System: The company uses cloud-based solutions and a Customer Data
Platform (CDP) to provide smooth customer experiences across different channels. It also
ensures effective call management.

Cybersecurity: Strong cybersecurity practices are in place to protect data during transmission
and guard against potential threats.

Physical And Community Infrastructure

Extensive Branch Network: The company operates in 3,504 locations across India. It has a
strong presence in rural areas and smaller towns, which helps extend its reach nationwide.
Corporate Offices: Bajaj Finserv has a network of offices and branches that support its various
business units and provide effective customer service.

Community & Healthcare Infrastructure

Health-Tech Ecosystem: Bajaj Finserv Health has created a platform that links over 700
hospitals, over 3,400 customer touchpoints, and more than 80,000 doctors. It provides a variety
of healthcare services, including preventive care and prepaid plans.

CSR Initiative: The Bajaj Group supports public health by helping build community
infrastructure. This includes setting up oxygen plants, providing respiratory equipment, and
establishing COVID-19 care centers.

Other Infrastructure

Financial Infrastructure: This includes a variety of products and services, such as home
loans, mutual funds, digital stockbroking, and health-tech plans. All of these are supported by
technology and a dependable partner network.

Marketplace & E-commerce Integration: Bajaj Finserv operates a solid e-commerce

platform and works with various online retailers. This helps the company reach more customers
and expand its user base.

Competitors of Bajaj Finserv:

Bajaj Finance competes strongly with top Indian financial companies in lending and financial
services. These include Shriram Finance, Cholamandalam Investment & Finance, Muthoot
Finance, Aditya Birla Capital, and Jio Financial Services. The company also runs a B-school
competition named the ATOM CEO's Challenge. This event encourages students to share
innovative ideas that could influence the future of financial services.
Like Bajaj Finserv, many other companies provide various financial products, including loans,
insurance, asset management, and credit cards. In the insurance sector, Bajaj Allianz competes
with major players such as LIC, Max Life, HDFC Life, and SBI Life. For consumer lending
and EMI financing, it faces competition from fintech-based NBFCs like Capital Float,
KreditBee, and ZestMoney. The growth of digital financial services has also brought new
competitors like Paytm, PhonePe, and Razorpay, especially in areas like personal loans and
digital insurance. Despite this competitive landscape, Bajaj Finserv holds a strong position
through innovation, trusted customer relationships, and a wide distribution network

FUTURE GROWTH AND PROSPECT

Future Growth Prospect of Bajaj Finserv: Bajaj Finserv’s future growth relies on strong
earnings and revenue projections, a growing digital presence, and expansion into areas like
green finance. Key subsidiaries such as Bajaj Finance aim to increase their customer base and
boost assets under management. The insurance business is also expected to improve its
profitability. To maintain its growth, the company is focusing on enhancing its digital services
and introducing new lending products to reach a wider market.

Fintech and AI Integration: The company aims to improve its use of artificial intelligence
(AI) and machine learning (ML) across its services. These technologies will help provide more
personalized customer experiences, improve targeting strategies, and boost risk assessment.
Additionally, AI is expected to make the loan approval process faster, which will reduce
processing time and increase customer satisfaction.

Digital Transformation: Bajaj Finserv has made significant investments in digital tools and
automation. These will remain a key factor in its growth. The growth of mobile apps, digital
loan applications, and online insurance services will enhance customer access and convenience.
This will help increase the overall number of users.

Green Finance: Bajaj Finance is entering the green finance sector. It plans to provide ₹20
billion in funding for solar and electric vehicle (EV) products by FY26. This initiative will help
diversify its income sources.
SME and Business Loans: The company is also increasing its presence in the business loan
market by providing tailored financial products for small and medium enterprises (SMEs). This
supports government efforts to encourage entrepreneurship and improves the business
environment. It allows Bajaj Finserv to help grow India’s SME sector.

Home Loan and Consumer Finance: Growing demand for housing and consumer goods is
expected to increase Bajaj Finserv’s home loan and consumer finance business. The company
is in a good spot to take advantage of this trend because of its strong brand and wide distribution
network.

Product Diversification: The company is launching new loan offerings. These include
microfinance, gold loans, and new car loans. This move aims to boost its assets under
management (AUM).

Strong Earnings Forecast: Bajaj Finance is expected to experience significant growth in both
earnings and revenue. Its earnings per share (EPS) is estimated to rise by about 19.6% each
year.

Focus on Financial Inclusion

Reaching Unbanked and underbanked: Bajaj Finserv is working to expand its presence in
rural and underserved areas to boost financial inclusion. The company uses digital platforms
and mobile apps. It also partners with local banks to reach these regions. Through these efforts,
it offers a variety of financial services, including small loans, insurance, and access to credit
for a wider segment of the population.

Affordable Financial Solution: Bajaj Finserv provides affordable loans and insurance
products to help lessen financial exclusion in India. This makes financial services easier for
more people to access.

Leveraging Data and Analytics

Advanced data analytics: Bajaj Finserv plans to keep using big data and analytics to improve
decision-making, assess credit risks, and offer customized financial products. With data
insights, the company can better understand customer behavior and adjust to market changes.
Strategic partnerships

Collaborations with Fintech company: Bajaj Finserv will keep forming partnerships with
fintech and tech companies to drive innovation, improve its digital platforms, and launch new
financial products. These collaborations will help the company remain competitive.

SWOT ANALYSIS

SWOT Analysis for Bajaj Finserv

The SWOT analysis of Bajaj Finserv shows its main strengths. These include a strong brand
image, a variety of services like insurance and lending, a wide distribution network, and a solid
focus on technology. However, it also has weaknesses. These include exposure to economic
ups and downs and a limited presence outside of India. The company has chances to grow by
expanding digital services, reaching rural areas, launching new products, and taking advantage
of India’s growing economy. At the same time, it faces threats from economic slowdowns,
increased competition from fintech firms and traditional banks, and potential changes in
regulations.

Strengths

[Link] Brand and Market Presence: Bajaj Finserv is a well-known financial

services company in India. It offers a range of products, including loans, insurance, and
investment solutions. As a part of the respected Bajaj Group, one of India’s most trusted
business houses, it gains added reliability. This connection boosts customer trust in the brand.
[Link] Product Portfolio: Bajaj Finserv offers a wide range of financial services,
including consumer lending, insurance, and wealth management. Its products consist of
personal loans, business loans, home loans, life insurance, health insurance, general insurance,
and different investment options. This diverse product line helps the company lessen its
dependence on one service or market. It also enables the company to serve a larger and more
varied customer base.

[Link] Distribution Network: Bajaj Finserv has a large distribution network with many
branches and partnerships in urban and rural areas. This strong presence allows the company
to provide its financial services to a broader and more varied population, including those in
remote or underserved regions. By making services more accessible, Bajaj Finserv helps
promote financial inclusion. Furthermore, its local presence builds customer trust and enables
faster service delivery.

[Link] Integration and Digital Transformation: Bajaj Finserv has invested heavily
in technology to improve its services and make operations smoother. It has created easy-to-use
mobile apps, websites, and AI tools for tasks like loan approval, customer service, and risk
assessment. These changes have helped the company work more efficiently, cut down
turnaround times, and lower costs. Using advanced analytics and automation also allows the
company to make decisions based on data, spot fraud, and manage credit risk better.

[Link] Distribution: Bajaj Finserv has a large distribution network that spans many
cities, towns, and rural areas across India. This wide reach makes its financial products and
services available to a diverse population. Moreover, its strong partner network, which includes
agents and dealers, aids in delivering services closely to customers, allowing for better market
presence and engagement in underserved regions.

Weaknesses

[Link] Vulnerability: The company’s profits can be influenced by changes in the

economy and interest rates. Economic downturns may lower customer spending and
borrowing. Meanwhile, rising interest rates can raise borrowing costs. Both factors can affect
the company’s financial performance.
[Link] on External Funding: Dependence on external funding sources makes the
company vulnerable to market risks. Changes in market conditions, such as rising interest rates
or limited credit availability, can impact its ability to raise funds on good terms.

[Link] to Credit Risk: As a lending institution, Bajaj Finserv faces credit risk. The
company uses technology and data analytics to manage and assess this risk, but it is still at risk
of loan defaults. Economic slowdowns or borrowers with low credit scores can cause non-
repayments, which could hurt the company's earnings.

[Link] Global Presence: Although Bajaj Finserv has tried to expand globally, its presence
in international markets is still quite small when compared to major financial service providers.
This limited reach lowers its growth potential outside India, especially in well-established
markets like the United States and Europe.

[Link] Competition: Bajaj Finserv competes strongly with major firms like HDFC, ICICI
Bank, and SBI, as well as new fintech companies entering the market. This high level of
competition puts pressure on prices, risks losing customers, and forces the company to keep
innovating to stay ahead.

Opportunities

[Link] Expansion: An established app helps support ongoing growth in digital banking and
financial services.

[Link] Product Development: The launch of new products, such as non-auto financing, keeps
driving business growth.

[Link] Market Growth: In India, more people are becoming aware of health and life
insurance, and they have more money to spend. Bajaj Finserv is in a good place to benefit from
this trend thanks to its solid insurance business. It can also grow by offering a wider variety of
insurance products.

[Link] Indian Economy: India's growing economy will likely increase the demand for
credit and financing. This will create new business opportunities.

[Link] and Collaboration with Fintech: Bajaj Finserv can work with fintech firms to
expand its product offerings and draw in more customers. Collaborating with digital platforms
in areas such as payments, lending, and insurance can boost its market presence and visibility.
THREATS

[Link] slowdown: An economic slowdown may cause an increase in loan defaults. This
can hurt the company's profits.

[Link] competition: Rising competition from new fintech firms and traditional banks
in both digital and regular markets poses a growing challenge

[Link] Threat: As Bajaj Finserv puts more emphasis on digital services, the risk of cyber
threats grows. Issues like data breaches, fraud, or hacking could damage its reputation and lead
to financial losses.

[Link] Rate Volatility: Changes in interest rates can affect funding costs and lower overall
profitability.

[Link] Expectations: Modern customers want fast, effective, and personalized financial
services. To keep up with these rising demands, Bajaj Finserv must consistently innovate and
improve its offerings as technology develops.

ANALYSIS OF FINANCIAL STATEMENT OF BAJAJ FINSERV

Balance sheet (in Crore)

Particulars Note 2024 2023 2022

Liabilities
Financial Liabilities
Payables 16
- Trade Payables 7015 5205.28 34009.01
- Other Payables 17 1864.69 1124.87 812.95
Deravative financial 5 6.12 119.86 219.71
instruments
Debt Securities 18 112252.54 81596.03 71505.55
Borrowings (Other than Debt 19 111617.47 81549.40 54363.56
Securi)
Deposits 20 60150.92 44665.56 30779.52
Subordinated Liabilities 21 3577.39 3630.29 3845.77
Insurance Contact liabilities 118280.77 94101.67 85593.46
Investment contract liabilities 11377.79 9797.32 10898.95
Lease liabilities 22 1333.79 823.69 664.78
Other financial liabilities 23 1830.50 1161.07 917.90
428568.81 323775.69 263631.09
Non-financial liabilities
Current Tax Liabilities (Net) 427.47 386.59 312.40
Deferred tax liabilities (Net) 11 514.49 108.04 305.75
Provisions 24 533.04 341.79 233.59

Other Non-Financial Liabilities 25 4109.97 3299.00 2916.21

Equity
Equity Share Capital 26 159.41 159.26 79.57
Other Equity 27 60169.23 46248.08 40167.23
Non-controlling interest 43447.21 31190 26073.12
Total Liabilities and Equity 537929.63 405509.19 333718.96

Particulars Note 2024 2023 2022

ASSETS

Financial assets
Cash and cash equivalents 5,765.02 2,593.62 4087.16

Bank balances other than cash and cash 6,621.64 2,783.60 351.87

equivalents
Derivative financial instruments 6,621.64 2,783.60 136.63

Trade receivables 591.17 226.50 3004.81

Loans 5,973.86 3,458.64 191853.14

Investment in joint venture and associates 326,742.16 242,749.57 13.37

Shareholders' investment 382.76 107.32 28499.00

Shareholders’ investment 49,615.62 40,583.46 90709.71

Policyholders’ investment 118,386.22 95,484.95 2738.45

Other financial assets 15,268.66 398,596.91

529,347.11 39,596.91 321358.14

Non-financial assets

Current tax assets (net) 435.84 318.31 311.60

Deferred tax assets (net) 1,028.17 1023.56 95.17

Investment properties 30.13 37.85 35.59

Property, plant and equipment 2528.82 2141.92 1718.88

Right-of-use assets 1216.30 733.45 592.78

Capital work-in-progress 82.12 61.84 53.64

intangible assets under development 137.96 129.43 689.34

Goodwill on consolidation 689.34 736.45 548.99

Other intangible assets 990.75 1043.13 7399.66

Another non-financial asset 1443.09 1043.13

8582.52 6912.28 1236082

537929.63 405509.19 33371896

Total

Statement of Profit and Loss (in Crore)

For the Year Ended 31 March

Particulars Note 2024 2023 2022

No
Revenue from Operations
Interest Income 28 53793.19 40155.24 31318.91
Dividend Income 157.98 131.62 108.16
Rental income 4.43 4.05 4.36
Fees and commission income 29 5435.85 4312.45 2963.42
Net gain/(loss) on fair value changes 30 2835.81 (155.51) 1058.02
Sale of services 31 655.12 325.87 340.49
Premium and other operating income 46322.65 36158.12 31429.84
Others 32 1176.88 1139.40 1182.88
Total revenue from operations 110381.91 82071.24 68406.88
Other income 33 1.09 .77 32.90
Total income 110383.00 82072.01 68438.98
Expenses
Employee Benefits Expenses 34 10360.95 8767.15 6559.58
Finance cost 35 18399.51 12201.42 9498.26
Fees and commission Expenses 36 6970.60 4238.17 3442.04
Impairment on financial instruments 37 4633.58 3230.98 4889.85
Cliams incurred pertaining to 21830 16592.00 16384.73
insurance
Reinsurance ceded 9563.14 7027.26 5969.74
Net changes in insurance 10255.49 6628.01 5754.19
Depreciation, amortisation and 900.13 677.80 562.73
impairment
Other expenses 6102.40 5899.28 4106.92
Total expenses 89016.06 65262.07 57168.04
Share of profit/(loss) of joint 8.09 1.19 (0.36)
ventures
Total Tax Expense 5779.67 4601.59 2957.05
Profit After Tax 15595.36 12209.54 8313.53
 Profit attribution to non- controlling 7447.57 5792.26 3756.76
expenses
Profit for the year 8147.99 6417.28 4556.77

The profit and loss statement of Bajaj Finserv for the 2 periods are attached in the
reference: Consolidated Financial [Link]
 CHAPTER-02
Conceptual Background and Literature review
Overview of the Financial Services Industry
The financial services sector consists of organizations that manage money and help turn savings
into investments. It offers a wide range of services, including banking, insurance, investment
management, and digital payment solutions. These services are vital for economic growth
because they assist individuals and businesses in managing their finances, investing in
opportunities, and obtaining funding. The industry includes various players, such as
commercial banks, insurance companies, non-banking financial institutions, and fintech
platforms. In recent years, digital technology has been important for driving innovation,

improving customer experiences, and broadening market reach.

SECTOR OVERVIEWS

The financial sector includes companies and institutions that manage money. They help move
and distribute financial resources within the economy.
Types of Financial Institutions

A. Investment Banks:

Investment banks do not take public deposits. Their main job is in corporate finance, where
they help businesses raise capital from financial markets. For example, they assist companies
in going public by launching Initial Public Offerings (IPOs). Besides advisory services, they
provide specialized support like prime brokerage, which involves lending securities to large
institutional investors. Investment banks make most of their money from advisory and
underwriting fees, as well as from trading activities in financial markets. Although many
commercial banks have investment banking divisions, regulations like the Dodd-Frank Act
now require them to keep these operations separate. Major firms in this area include Goldman
Sachs, Barclays, and Morgan Stanley.

B. Investment Managers:

Investment managers are firms that handle money for individuals and organizations. This group
includes mutual fund and exchange-traded fund (ETF) managers, along with hedge funds.
Mutual fund and ETF managers mainly work with everyday investors by offering ready-made
investment options. They make money by charging a small fee based on the total assets they
manage, which is referred to as assets under management (AUM). In contrast, hedge funds
primarily serve institutional clients and wealthy individuals. The term "hedge fund" includes
various alternative investment firms, such as those involved in private equity, venture capital,
and commodity trading (CTAs). Notable names in this field are Fidelity (mutual funds),
BlackRock (ETFs), D.E. Shaw (hedge funds), and Carlyle Group (private equity).

C. Government Institutions:

The government plays a vital role in how financial markets work by setting rules and
overseeing operations through various institutions. The central bank is usually the most
important government body in any financial system. It issues the country’s official currency
and manages interest rates. It often affects exchange rates in foreign currency markets as well.
In addition to central banks, regulatory agencies create and enforce rules to ensure fair and
clear market practices. These regulators require companies and investors to provide detailed
information and take action against illegal activities such as insider trading. Major government
institutions in this area include the Federal Reserve (central bank), the Securities and Exchange
Commission (SEC), and the Federal Deposit Insurance Corporation (FDIC).
D. Retail Banks:

Retail banks, or commercial banks, are financial institutions that accept deposits from
individuals and pay interest on those savings. They earn money by lending those funds to
borrowers at higher interest rates than what they pay to depositors. The difference between the
interest they earn on loans and the interest they pay on deposits is their main source of profit.
Some well-known retail banks around the world include Bank of America, Royal Bank of
Canada, BNP Paribas, Mitsubishi UFJ, and HDFC Bank.

E. Exchanges and Clearing House:

Financial exchanges are places where assets like stocks are bought and sold. The stock
exchange is the most well-known type. For a stock to be traded on an exchange, it must first
be listed. This requires the company to meet specific rules set by the exchange. Exchanges
collect buy and sell orders from various investors and display them in an order book. When a
buy order matches a sell order, a trade occurs. Modern electronic exchanges can process
millions of these trades every day.

Clearing houses have a separate but important role. They manage the final settlement of trades,
ensuring that all parties receive what they are owed. This is crucial in the derivatives market,
where contracts often end with a cash payment based on changes in the price of an underlying
asset. The clearing house determines who pays, who receives, and how much is exchanged.
These organizations are often referred to as Central Counterparty Clearing (CCP) parties. One
example is CME Clearing, which oversees settlements for the Chicago Mercantile Exchange
(CME).

F. Insurance Providers

Insurance companies are a big part of the financial industry. They help protect people and
businesses from unexpected financial losses due to events like accidents, natural disasters, or
health problems. In exchange for this protection, customers pay regular premiums. For
individuals, insurance providers offer various products, including life insurance, health
insurance, auto insurance, and home insurance. For businesses, they provide specialized
coverage, such as marine insurance for goods transported by sea, protection against data
breaches, and worker’s compensation insurance. Reinsurance companies support other
insurance firms by offering them coverage. This helps spread risk and gives financial backup
in case of large claims or disasters. Well-known companies in this area include Manulife
(insurance) and Munich Re (reinsurance).

G. Payment Processors

Payment processors serve as intermediaries that help transfer funds between buyers and sellers.
They connect different financial institutions and ensure transactions occur securely and
efficiently. Most digital payments depend on these processors. When someone uses a debit or
credit card, the payment processor sends the transaction details to the buyer’s bank. It then
moves the money from the buyer’s account to the seller’s account. Payment processors make
money by charging a small fee on each transaction they handle.

Some well-known payment processing companies are Visa, MasterCard, Interac, and American
Express.

Macroeconomics in Financial Sector

In macroeconomics, experts often describe the economy as a circular flow of money and
resources between households, businesses, and the government. For many years, traditional
models mainly focused on these three sectors. However, after the Great Financial Crisis of 2007
and 2008, economists started to recognize the important role of the financial sector in the
overall economy. The crisis showed how issues within banks, financial institutions, and credit
markets could quickly spread and cause widespread economic harm. As a result, economists
revised their models to include the financial sector as a key part. This change allowed for a
better understanding of how financial systems impact growth, employment, and stability. This
shift became crucial when central banks worldwide began using unconventional monetary
tools, such as quantitative easing and near-zero interest rates, to address financial instability
and support economic recovery. Including the financial sector in economic models helps
policymakers understand the connections between financial markets and the real economy
more effectively.

Key Takeaways

The modern financial sector includes many different institutions and organizations. Each plays
an important role in the economy. Money is often viewed as the lifeblood of economic activity.
The financial sector is the system that keeps this money flowing smoothly throughout the
economy. From everyday purchases like a chocolate bar to large business deals such as
company acquisitions, the financial sector is involved in almost every economic transaction.
 LITERATURE REVIEWS

Literature Reviews of A study Financial Health Analysis of Bajaj Finserv

using Ratio analysis and the Altman Z-score Method.

[Link] and Oshaibat (2018) pointed out that Altman’s Z-Score model is a helpful tool
for spotting financial trouble in various industries. In their study of 17 firms, mostly from the
retail sector, over two years, the model accurately predicted about 94% of bankruptcies.
Previous research indicated that nearly 90% of firms might encounter financial distress, and
this study further confirmed the model’s high accuracy, even though some limitations were
noted.

[Link] Ilahi et al (2015)- “The Z-score model showed signs of distress, but the banks were
operating successfully.”

The study aimed to identify financial problems in commercial banks, which play an important
role in economic development. Findings showed the model predicted financial distress, but the
banks were actually stable. This proved the Z-score was not effective for commercial banks.

[Link] Sharma & Mayanka (2015)- “While tools such as capital adequacy, profitability, and
CAMEL are available, the banking sector underuses the Altman Z-score.”

They stressed that strong bank performance is essential for economic stability. The collapse of
Lehman Brothers had a global impact. The study identified two banks in a distress zone based
on the Z-score, but their capital adequacy was still solid. It suggested that hybrid models like
CAMEL should be used for a better evaluation of financial health.

[Link] pandya (2021) – “A Study of identified that financial performance”

The study showed that the Altman Z-Score model was useful in giving early warnings of
financial trouble. Both types of firms displayed signs of instability before they went bankrupt.
This emphasizes the model’s role as a warning tool in various sectors.

5. Carl B & Collier (2014) – “Financial ratios are important tools for evaluating a company's
financial performance.”

Financial ratios help evaluate a company’s performance, profitability, liquidity, and financial
stability. They guide stakeholder decisions. Important ratios such as ROA, ROE, current, quick,
and debt-to-equity indicate business success and risk levels.
6. Franklin Allen and Elena Carletti (2022) –“The Role of Financial Institutions in the Global
Economy”

This study looks at how financial institutions influence the global economy and emphasizes
the need for regulations to keep financial stability.

7. Adam Shisis (2014) conducted a study on private hotels in Greece to test the effectiveness
of insolvency forecasting. The Altman Z-Score models were used one year before bankruptcy,
and results were categorized into three distress zones. Companies with a Z-score below 0.8
were the most likely to face bankruptcy. The model accurately predicted the actual bankruptcies
that happened in 2008.

[Link] & Nitu. (2016)- “Basic stock analysis and general investment research”

Financial statements show a company's past performance, current financial status, and future
potential. They are important tools for assessing a firm's financial health. Investors use them to
make informed choices about future investments.

[Link] L. (2017)- “Financial Performance Analysis of an Indian financial Services

Sector using CAMEL Framework”

While the CAMEL model is mostly used for banks, this study shows that factors like capital
adequacy and management efficiency are also important for NBFCs such as Bajaj Finserv..

[Link] and Bagheri (2021) – “The Relationship between Financial Ratio and stock
Returns”

The study called "Evidence from the Tehran Stock Exchange" looked at the connection between
financial ratios and stock returns. It found that ratios such as earnings per share and return on
assets significantly affected stock returns in the Tehran Stock Exchange.

[Link] S & Mehta (2017)- “Evaluating Distress Measures in the Banking sector”

Identify financial distress in banks by examining 1,175 banks involved in mergers, acquisitions,
or divestitures over a 22-year period. They tested ten different accounting indicators and used
media reports as a reference. The study found that the best way to spot distress is by checking
the ratio of non-performing loans to total loans, particularly when this ratio is in the top 20%
of the industry over a three-year average. This method is more reliable than others, like loan
loss provisions, which rely heavily on management estimates.
[Link] R. Malini and DR.A. Meharaj Banu (2020)- “Financial performance to understand
the financial position of Bajaj”

In 2017, a detailed analysis showed that Bajaj Industries Limited performed well financially
over the five-year period from 2013. However, the study suggests that the company needs to
lower its operating expenses to achieve higher net profits.

13. Raja Narayanan Sandherr Sharma (2019)- “Analysis of Financial Performance Tools
Used for Bajaj Industry.”

The study used different tools and techniques, including trend analysis, to evaluate the financial
performance of Bajaj Industries. It aimed to understand important financial indicators,
accounting methods, and how the company’s financial performance impacts its overall
financial position.

[Link] A, & Joshi .M (2021)- “Impact of Covid-19 on Indian NBFCs”

the effects of the Covid-19 pandemic on Indian Non-Banking Financial Companies (NBFCs).
The study found that these companies faced significant challenges, including liquidity issues,
declining asset quality, and lower profitability during the pandemic.

[Link] A. (2019)- “The Effect of the Financial ratio (Altman Z-Score) on the financial
Distress”

This sector is important for the country’s economy. The researcher used the Altman Z-Score
model to calculate four financial ratios for 139 companies during 2016 and 2017 to predict
bankruptcy. The findings showed that all four ratios helped improve the model’s accuracy in
predicting financial distress.

[Link] S (2018)- “Using Altman Z-score to Predict Financial Distress in the Sector”

The study looked at financial distress in publicly listed automotive and components companies
from 2012 to 2016, covering 64 firms. Using the Altman Z-Score model, the research found
that several companies in this sector faced financial difficulties during this time.

17.P. Bhaskar Yadav & Dr k. Haritha (2022): A study examined the ratio analysis of Bajaj
Finserv compared to Sriram Bajaj. It focused on the company's liquidity and profitability. Using
secondary data, the research found that the current ratio is satisfactory. The debtor turnover
ratio is effective, and the overall financial performance of the company is stable.
18. K. Sai Dakshayani and Dr. P. Viswanath (2022): Conducted a study on the ratio analysis
of Bajaj Finserv compared to Sriram Bajaj. The goal was to evaluate the company’s liquidity
and profitability. Using secondary data, the research found that the current ratio is satisfactory.
The debtor turnover ratio is efficient, and the company’s financial performance is stable.

[Link]. N (2017)- “Financial Ratio Analysis Using Altman Z-Score and Statistical
Modeling”

Conducted a study to examine financial data and results using multiple regression and
descriptive analysis. The research focused on companies listed on the National Stock Exchange
in 2014. It looked at their financial statements to calculate the Altman Z-Score for assessing
financial health.

[Link] A (2017)- “Examining the Relationship Between Financial Ratios in the Altman Z-
Score Model”

the relationship between five financial ratios in the Altman Z-Score model. The study used
simple and multiple regression analysis on a sample of 26 randomly chosen companies from
the 2014 Stock Exchange list. It developed a model that identified two main variables
influencing the Altman Z-Score. The findings showed that some models affected the financial
ratios more significantly than others.
 CHAPTER -03

RESEARCH DESIGN
RESEARCH DESIGN
This study uses a descriptive research design to evaluate the financial health of Bajaj Finserv.
The research applies quantitative methods by using financial ratio analysis and the Altman Z-
Score model to assess the company’s liquidity, profitability, solvency, and overall financial
stability.

• Ratio Analysis: Key financial ratios, such as current ratio, debtor’s turnover ratio,

return on assets, and debt-equity ratio, will be calculated to evaluate different aspects

of financial performance.

• Altman Z-Score: The Z-Score will be calculated using relevant financial ratios to

predict the chance of financial trouble or bankruptcy.

Statement of the problem:

In the competitive financial industry, companies like Bajaj Finserv need to maintain strong
financial health for long-term growth and stability. However, market changes, rising debt, and
operational challenges can affect the company’s liquidity, profitability, and overall financial
condition. Therefore, we need to evaluate Bajaj Finserv’s financial status using reliable
methods such as ratio analysis and the Altman Z-Score model. This study aims to assess the
company’s financial health to help stakeholders make better decisions and take timely actions

if necessary.

Need for the study:

In the fast-changing financial industry, companies like Bajaj Finserv encounter challenges that
can affect their financial stability. Regularly checking financial health is crucial to spot risks
early and keep a strong financial position. While many financial tools exist, using both ratio
analysis and the Altman Z-Score model together provides a clearer and more complete picture
of a company’s situation. This study is vital for assessing Bajaj Finserv’s financial performance.
It helps investors, management, and other stakeholders make informed decisions for continued

growth and to prevent financial issues.

Key Goals Include:

• To examine Bajaj Finserv’s liquidity, profitability, and solvency with ratio analysis.

• To assess the company’s financial stability and the risk of distress using the Altman Z-

Score model.

• To pinpoint the company’s financial strengths and weaknesses.

• To provide insights that help management and investors make better decisions.

• To suggest ways to improve the overall financial health of Bajaj Finserv.

To evaluate the financial health of Bajaj Finserv Ltd over the last three financial years, we will
look at key financial ratios related to profitability, liquidity, solvency, and efficiency. This
analysis will reveal trends in revenue growth, net profit, and returns to shareholders. We will
also compare Bajaj Finserv’s performance with industry standards and major competitors.
Based on this assessment, we will provide recommendations to enhance the company's
financial results.

Objective:

1. To evaluate the financial performance of Bajaj Finserv Ltd over the last three financial

years, I will use key financial ratios such as profitability, liquidity, solvency, and

efficiency.

2. I will apply the Altman Z-score model to assess the company's risk of financial distress

or bankruptcy.

3. I aim to identify trends and patterns in revenue, net profit, and shareholder returns

throughout the study period.

4. I will compare Bajaj Finserv’s financial health with industry benchmarks and leading

competitors.
 5. I will highlight strengths and weaknesses in the company’s financial structure and

operations.

6. I will provide strategic recommendations to improve financial performance and ensure

long-term sustainability based on the findings.

Scope of the study:

This study looks at the financial health of Bajaj Finserv Ltd over the past three years. It uses
important ratios such as profitability, liquidity, solvency, and efficiency. The research also
applies the Altman Z-score to measure the risk of financial trouble. The study compares Bajaj
Finserv with industry standards and major competitors. The aim is to identify financial
strengths, weaknesses, and trends in performance. The analysis relies solely on publicly
available financial data.

RESEARCH METHODOLOGY:

Research Design

This study takes a descriptive and analytical approach to evaluate the financial health of Bajaj
Finserv Ltd over the past three years. It draws on secondary data from annual reports, financial
statements, and trustworthy online sources. Ratio analysis assesses profitability, liquidity,
solvency, and efficiency. The study uses the Altman Z-score method to determine the
company's risk of financial distress. The results are compared with competitors and industry
standards to offer valuable insights and recommendations.

Conclusive Research:

Bajaj Finserv has moderate profitability. ROCE and ROA have improved, but ROE has
slightly declined. The company deals with tight liquidity because of a low current ratio and
decreasing interest coverage. A high debt-to-equity ratio shows rising financial risk from
increased borrowing. The Altman Z-Score has dropped significantly, suggesting possible
financial stress; however, this model might not perfectly fit financial firms. Nevertheless,
strong recent profit growth indicates solid business performance and underlying strength.
Sources of Data Collection:
This study uses secondary data from credible financial platforms, company disclosures, and
academic resources.

Annual Reports of Bajaj Finserv Ltd:

These reports provided audited financial data such as the balance sheet, income statement, and
cash flow statement for Bajaj Finserv. (2023-24). Annual Report 2022,2023,2024:

Financial Websites:

Websites like Moneycontrol, Equitymaster, [Link], and the Economic Times

supplied updated financial ratios, stock performance indicators, and industry comparisons.
These sources were crucial for evaluating ratios like ROE, ROA, ROCE, current ratio, interest
coverage, and debt-to-equity.

[Link]:

This source offered both current and historical Altman Z-Score values, along with the variables
needed to calculate the score. This information helped assess the company’s financial risk and
solvency.

Academic and Theoretical References:

Concepts and formulas related to the Altman Z-Score model, including its relevance and
limitations for financial service companies, were obtained from academic articles and reliable
sites like Wikipedia.

Wikipedia. (2024). Altman Z-Score. Retrieved from [Link]

score

HYPOTHESIS

1. Null Hypothesis (H₀): Bajaj Finserv does not show any signs of major financial risk

or distress based on the results of ratio analysis and the Altman Z-Score.

2. Alternative Hypothesis (H₁): Bajaj Finserv shows signs of financial weakness or

potential distress, as indicated by its financial ratios and a falling Altman Z-Score.
Limitation:

i. Application of Altman Z-Score: The study relies solely on secondary data

from sources such as annual reports and financial websites. These sources
might have delays or inaccuracies that the researcher cannot control.

ii. Limited Scope of Ratio: Ratio analysis provides a snapshot of the company's financial
condition. However, it overlooks key non-financial factors such as management
effectiveness, brand reputation, and competition. These elements also play a role in
financial stability.

iii. Currency and Time Constraints: The study includes financial data only up to the most
recent fiscal year or quarter available. It may not reflect the latest changes or future
trends
.
iv. Impact on Market Conditions: Financial ratios and scores rely on past data. They
might not fully reflect sudden market changes, shifts in regulations, or economic factors
that influence Bajaj Finserv’s current financial situation.

v. Reliance on Secondary Data: This study relies solely on secondary data such as
annual reports and financial websites. These sources may have delays or mistakes that
the researcher cannot manage.:

CHAPTER SCHEME:
Chapter 1: Introduction: This chapter introduces the study by explaining its background,
main objectives, research questions, and scope. It shows why it is important to look at a
company's financial health in today's business environment. The choice of Bajaj Finserv as the
focus of the study is also clearly explained.
Chapter 2: Conceptual Background and Literature review: This chapter summarizes past
research, theories, and articles on financial ratio analysis and the Altman Z-Score model. It
points out important findings and gaps in existing studies. It also explains how this research
contributes to current knowledge.

Chapter 3: Research Design: This chapter explains the research methods for collecting and
analysing data. It mainly focuses on secondary sources. It also discusses the tools used, such
as financial ratios and the Altman Z-Score, as well as the study's hypothesis and design.

Chapter 4: Data Analysis and Interpretation: This chapter looks at the collected data through
key financial ratios and the Altman Z-Score model. The results help to evaluate Bajaj Finserv’s
financial condition. We'll use tables, charts, and trends to make it easier to understand.

Chapter 5: Finding, Conclusion and Suggestions: This chapter presents the main findings
from the analysis and indicates whether the proposed hypotheses were confirmed. It provides
a clear conclusion about Bajaj Finserv’s financial health based on the results. Suggestions for
improvement and ideas for future research are also included.
 CHAPTER 4

ANALYSIS AND INTERPRETATION

ANALYSIS & INTERPERTATION OF BAJAJ FINSERV

Ratio analysis is a method to evaluate an organization's financial health. It helps accountants

see how well a company makes profits and runs its operations. At the same time, it gives
investors a look into the company's liquidity and its ability to handle short-term working capital
needs.

Ratio analysis is a method for examining and comparing a company’s financial data using its
financial statements. It uses figures from these statements to evaluate the company’s overall
performance and financial health. This method minimizes the need to review and compare
individual line items from each statement separately.

Types of Ratios:

1. Profitability Ratio

2. Liquidity Ratio

3. Solvency Ratio

Profitability Ratio

In general, higher profitability ratios than those of competitors or past performance suggest
that a company is doing well. These ratios are most useful when compared to similar
businesses, the company's earlier results, or the average numbers in the industry.

Gross Profit ratio = Gross Profit / Net revenue from operations x 100

Net revenue from operations = Net Sale = Sale -Sale return

Gross Profit = Sale – Cost of Sales

Calculation of Gross Profit ratio for the year 2022-23

Gross Profit Ratio = Gross profit /Net revenue from operation

=12,457.14 /68,438.98 x 100

=18.20%

So the Gross Profit Ration for the year 2022-23 is 180.20%

Calculation of Gross Profit Ratio for the year 2023-24

Gross profit Ratio = Gross profit / Net revenue from operations x 100

= 18,565.40 / 82,073.20 x100

= 22.62%

So, the Gross profit Ratio for the year 2023-24 is 22.62%

Year Gross profit Net Revenue Gross Profit ratio

2023 12,457.14 68,438.98 18.20%
2024 18,565.40 82,073.20 22.62%

Interpretation

The Gross Profit Ratio shows the margin available before a company faces operating losses.
This makes it an important measure of profitability. For Bajaj Finserv Ltd, the ratio was
18.20% in 2022 and increased to 22.62% in 2023. This growth indicates a positive
connection between sales and profits over time. Overall, the company’s gross profit ratio has
followed an upward trend, signalling improved profitability.

[Link] profit Ratio

The Net Profit Ratio shows the percentage of net profit in relation to total sales. It reflects the
overall profit of a business after all expenses are paid.
Net profit Ratio = Net profit / Net revenue x 100

Calculation of Net Profit Ratio for the year 2022-2023

Net profit Ratio = Net profit / Net Revenue x100

=4,556.77/68,438.98 x 100

= 6.66%

So, the Net profit Ratio for the year 2023-24 goes beyond 6.66%

Net profit Ratio for the year 2023-24

Net profit Ratio = Net profit / Net Revenue x100

=6,417.28/82.073.20 x 100
=7.82%
So, the Net profit ratio for year 2023-24 goes beyond 7.82%

Year Net profit Net Revenue Net profit Ratio

2023 4,556.77 68,438.98 6.66%
2024 6,417.28 82,073.20 7.82%

Interpretation
The Net Profit Ratio indicates how profitable a company is and what portion of net revenue is
available to owners. It shows how well the business runs and serves as an important measure
for investors and lenders. This ratio reveals management’s effectiveness in running operations.
For Bajaj Finserv Ltd, the ratio has changed over the last three years.

Operating Ratio

The Operating Ratio measures the relationship between operating expenses and net sales. It
shows how well a company manages its costs in relation to revenue. A lower ratio indicates
better operational efficiency and higher profitability.

Operating Ratio = Operation Expense / Net Revenue from operating x 100

Net Revenue from operating = Net Sale = Sale -Sale Returns

Calculation of Operating Ratio for the year 2022-23

Operating Expenses =623.38

Operating Ratio =Operating Expense / Net Revenue from Operating

=623.83 / 68,4838.98 x 100

=0.91%

So, the operating Ratio for the year 2022-23 is 0.91%

Calculation of Operating Ratio for the year 2023-24

Operating Expenses = 1,076.47

Operating Ratio = Operating Expense / Net Revenue from Operating

= 1,076.47 / 82,073.20 x 100

= 1.31%

So, the operating Ratio for the year 2023-24 is 1.31 %

Year Operating Net Revenue Net profit Ratio

Expenses
2023 623.83 68,438.98 0.91%
2024 1,076.47 82,073.20 1.31%
Interpretation

The operating ratio is useful for assessing a company's efficiency and profitability. There isn't
a set standard for this ratio, but it's essential to examine its trend over several years to gauge
the company's performance. A lower operating ratio points to better operating profit, while a
higher ratio indicates poorer performance.

Liquidity Ratio

Liquidity ratios measure a company's ability to meet its short-term obligations using its current
assets. These ratios show how easily a firm can convert its assets into cash or cash equivalents
to pay off debts when they are due. Liquidity involves more than just having cash on hand; it
also includes how quickly other current assets can be turned into cash or marketable securities.

Current Ratio

The current ratio, also known as the working capital ratio, measures a company's ability to pay
its short-term debts within a year using its current assets. It shows if the firm has enough
resources to cover debts that are due soon. The formula used to calculate the current ratio is:

Current Ratio = Current Assets ÷ Current Liabilities

Calculation of Current Ratio for the year 2022 – 23 is given

Current Ratio = Current Assets / Current Liabilities

= 17,994.18 / 1,18,077.44

= 0.15: 1

So, the Current Ratio for the year 2022 – 23 is 0.15: 1.

Calculation of Current Ratio for the year 2023 – 24 is given

Current Ratio = Current Assets / Current Liabilities

= 21,033.05/1,29,661.62

= 0.16:1

So, the current Ratio for the year 2023 – 24 is 0.16: 1

Year Current Assets Current Liabilities Current Ratio

2022-23 17,994.18 1,18,077.44 0.15: 1
2023 – 24 21,033.05 1,29,661.62 0.16: 1
Interpretation:

According to industry standards, the ideal current ratio is 2:1. This means a company should
have at least twice as many current assets as current liabilities. This helps the firm meet its
short-term obligations. However, a very high current ratio might indicate that some assets are
not being used efficiently and are just sitting idle. Therefore, keeping a proper balance is
important. For this company, the current ratio has steadily increased over the years.

Cash Ratio

This ratio gives a tougher assessment of liquidity than the quick ratio. It zeroes in on the
company’s ability to cover short-term obligations using just cash and cash equivalents. Unlike
other liquidity ratios, it leaves out all other current assets.

Cash ratio= Cash+ Bank Balance +Marketable Securities/Current Liabilities

Calculation of Cash Ratio for the year 2022– 23 is

Cash ratio = Cash + Bank balance + Marketable Securities / Current Liabilities

= 4,403.03 / 1,18,077.44

= 0.037: 1

So the Cash ratio for the year 2022 – 23 is 0.037: 1

Calculation of Cash Ratio for the year 2023 – 24 is

Cash ratio = Cash + Bank balance + Marketable Securities / Current Liabilities

= 5,377/1,29,661.62

= 0.041: 1 = 0.04: 1

So the Cash ratio for the year 2023 – 24 is 0.040: 1

Year Cash Current liability Cash Ratio

2022-23 4,403.03 1,18,077.44 0.037: 1

2023 – 24 5,377.22 1,29,661.62 0.04: 1

Interpretation

This ratio indicates how much cash a company has to pay off its current liabilities. Although
there isn't a perfect value, a ratio above 1 might point to too much cash and poor resource use.
High liquidity can also mean lower profitability.

Quick Ratio

Quick assets are items that can be converted into cash within 90 days. They belong to current
assets, but not all current assets meet this definition. Common quick assets are cash, cash
equivalents, and marketable securities.

Quick Ratio= Quick Assets/Quick Liabilities

Quick Assets= All Current Assets - Stock - Prepaid Expenses

Calculation of Quick Ratio for the year 2022 – 23 is

Quick ratio = Quick Assets/Quick Liabilities

= 17,994.18 / 1,18,077.44

= 0.15

So the Quick ratio for the year 2022 – 23 is 0.15

Calculation of Quick Ratio for the year 2023 – 24 is

Quick ratio = Quick Assets/Quick Liabilities

= 21,033 /1,29,661.62

= 0.16

So the Quick ratio for the year 2023 – 24 is 0.16.

Year Quick Assets Quick Liability Quick Ratio

2022-23 17,994.18 1,18,077.44 0.15

2023 – 24 21,033.05 1,29,661.62 0.16

Interpretation

A quick ratio of 1:1 is ideal. This shows that the firm can meet its short-term debts without
selling long-term assets. It is stricter than the current ratio since it excludes inventory. The
company's ratio is below 1, which indicates possible trouble in covering short-term obligations.

Solvency Ratio

Solvency ratios, also called leverage ratios, assess a company’s ability to repay long-term debt.
They help investors evaluate if the firm can meet interest payments and protect their
investment. These ratios compare debt with equity, assets, or earnings

Debt Equity Ratio

The debt-to-equity ratio shows the relationship between a company’s long-term debt and its
total equity. Since both values come from the balance sheet, it is a balance sheet ratio. The
formula is given below.
Debt to Equity Ratio = Long –term debt / Shareholders Fund

Long –term Debt = Debentures + Long term loans Share Holders Fund = Equity share
capital + Preference share capital + Reserves– Fictitious assets

Calculation of Debt Equity Ratio for the year 2022 – 23 is given

Debt to Equity Ratio = Long – term Debt / Shareholders Funds

= 1,49,015.85 / 66,319.92

= 2.25

So the Debt Equity Ratio for the year 2022 – 23 is 2.25

Calculation of debt Equity Ratio for the year 2023 – 24 is given

Debt to Equity Ratio = Long – term Debt / Shareholders Funds

= 1,98,141.45 / 77,598.08

= 2.55

So the Debt Equity Ratio for the year 2023 – 24 is 2.55

Year Long term debt Shareholders Fund Debt Equity Ratio

2022-23 1,49,015.85 66,319.92 2.25

2023 – 24 1,98,141.45 77,598.08 2.55

Interpretation
The debt-to-equity ratio indicates a company’s financial stability. A lower ratio means more
security for the business, but it also shows diluted equity. In contrast, a higher ratio suggests a
heavy dependence on borrowed funds, which might turn away both investors and lenders.

Debt Ratio
The debt ratio shows how much of a company's long-term debt is financed by its total capital
used. In some cases, net fixed assets can replace capital used. It indicates the percentage of
long-term liabilities compared to long-term assets.
Debt Ratio =Total Debt / Total Assets
Calculation of Debt Ratio for the year 2022 – 23 is
Debt Ratio =Total Debt / Total Assets
= 2,67,093.29 / 3,33,413.21
= 0.80
So the Debt Ratio for the year 2022 – 23 is 0.80.
Calculation of Debt Ratio for the year 2023 – 24 is given
Debt Ratio =Total Debt / Total Assets
= 3,27,803.07 / 4,05,401.15
= 0.80
So the Debt Ratio for the year 2023 – 24 is 0.80.
Year Long term debt Net Assets Debt Ratio

2022-23 2,67,093.29 3,33,413.21 0.80

2023 – 24 3,27,803.07 4,05,401.15 0.80

Interpretation
The debt ratio indicates a company's financial leverage. A low ratio suggests greater stability
and safety for creditors. A high ratio may create long-term worries but can improve returns
for shareholders.
Interest Coverage Ratio
The interest coverage ratio indicates how often a company can cover its interest payments
with its current earnings. Simply put, it shows the safety cushion a business has to fulfill its
interest obligations on debt during a certain time frame.
Interest Coverage Ratio = EBIT / Interest Expenses
Calculation Of interest Coverage ratio for the year 2022 – 23 is given below
Interest coverage ratio = EBIT / Interest Expenses
= 11,833.31 / 26,073.12
= 0.45
So the interest coverage ratio for the year 2020 – 21 is 0.45
Calculation of Interest coverage ratio for the year 2023 – 24 is given below,
Interest coverage ratio = EBIT / Interest Expenses
= 17,488.93/ 31,190.74
= 0.56
So the interest coverage ratio for the year 2023 – 24 is 0.56
Year EBIT Interest Expenses Interest Coverage Ratio

2022-23 11,833.31 26,073.12 0.45

2023 – 24 17,488.93 31,190.74 0.56

Interpretation
The interest coverage ratio shows how well a company can pay its interest on debt. During
the study period, the company's ratio changed, showing both gains and losses.

ALTMAN -Z SCORE METHOD

The Altman Z-score is a model created by Edward I. Altman in 1968. It combines several
financial ratios into one score to estimate how likely a company is to go bankrupt, usually
within about two years. This score comes from using discriminant analysis on historical data
from failed and surviving companies. It has been updated for private firms, non-manufacturers,
and emerging markets.

Original Z-Score — Firms (Altman, 1968)

Z=1.2X1+1.4X2+3.3X3+0.6X4+1.0X5

WHERE:

1. X1 = Working capital / Total assets

2. X2 = Retained earnings / Total assets

3. X3 = EBIT / Total assets

4. X4 = Market value of equity / Book value of total liabilities

5. X5 = Sales / Total assets

Zones

• Z > 2.99 → “Safe” (low bankruptcy risk)

• 1.81 < Z < 2.99 → “Gray” zone (some risk)
• Z < 1.81 → “Distress” zone (high bankruptcy risk)

Current assets

1. Cash = 5,765.02
2. Bank balances = 6,621.64 → 5,765.02 + 6,621.64 = 12,386.66
3. Trade receivables = 591.17 → 12,386.66 + 591.17 = 12,977.83
4. Loans = 5,973.86→ 12,977.83 + 5,973.86 = 18,951.69
5. Other financial assets = 15,268.66 → 18,951.69 + 15,268.66 = 34,220.35
6. Current tax assets = 435.84 → 34,220.35 + 435.84 = 34,656.19
7. Current assets =34,656.19

Current liabilities

1. Trade payables =7,015.00

2. Other payables = 1,864.69 → 7,015.00 + 1,864.69 = 8,879.69
3. Other financial liabilities = 1,830.50 → 8,879.69 + 1,830.50 = 10,710.19
4. Current tax liabilities = 427.47 → 10,710.19 + 427.47 = 11,137.66
5. Provision = 533.04 → 11,137.66 + 533.04 = 11,670.70
6. Current liabilities = 11,670.70

Working capital (WC)

WC = Current assets −Current liabilities

=34,656.19−11,670.70=22,985.49

= 22,985.49 Crore

Retained earnings (RE)

Other Equity = 60,169.23

EBIT

EBIT ≈ PBT + Finance cost

=21,375.03+18,399.51

=39,774.54

(EBIT = 39,774.54)

COMPUTE THE X- RATIOS

• X1 = Working capital / Total assets

=22,985.49/537,929.63

= 0.0427295481009. (≈ 0.04273)

• X2 = Retained earnings / Total assets

= 60,169.23/537,929.63
= 0.111853347807 (≈ 0.11185)
• X3 = EBIT / Total assets
=39,774.54/537,929.63
=0.0739400430499. (≈ 0.07394)
• X4=Book equity / Total liabilities
=60,328.64/434,153.78
= 0.13895684612. (≈ 0.13896)
(Each division use the Total assets = 537,929.63)

Compute Altman-z

Use the formula:

Z″=6.56X1+3.26X2+6.72X3+1.05X4

1. 6.56 × X1 = 6.56 × 0.0427295481009 = 0.2803058355419

2. 3.26 × X2 = 3.26 × 0.111853347807 = 0.3646419138508

3. 6.72 × X3 = 6.72 × 0.0739400430499 = 0.49687708929536

4. 1.05 × X4 = 1.05 × 0.13895684612 = 0.1459046884260

Total = 0.280 + 0.365 + 0.497 + 0.146

=1.29

Emerging market variant

Z″ emerging = Z″ + 3.25 = 1.29 + 3.25 = 4.54

Interpretation

• Altman ranges (typical guidance):

• Z″ > 2.9 = safe (low bankruptcy risk)

• 1.23 < Z″ < 2.9 = grey zone

• Z″ < 1.23 = distress zone

• Here: Z″ (developed) ≈ 1.29 → around the grey/distress

boundary.
• Emerging variant ≈ 4.54 → appears safe.
Altman models were created using non-financial samples. For banks, NBFCs, and insurers,
such as Bajaj Finserv, the model is not a dependable predictor of credit or insolvency. This is
due to the differences in their balance-sheet makeup and leverage. Treat the numeric result as
a simple illustration only.

Total Growth of Company in Graphical

 CHAPTER 5

FINDING, CONCLUSION AND SUGGESTIONS

Finding from the study

Bajaj Finserv Limited (BFSL) is a major financial services group in India, focusing on lending,
insurance, and investment management. As a non-banking financial company (NBFC), its
business model involves high leverage and exposure to financial risks. Evaluating the financial
stability of such an organization is important for investors, regulators, and long-term strategic
planning.

This study looks at the company's performance and stability through two key approaches:

Ratio Analysis, which includes profitability, liquidity, solvency, and efficiency indicators.
These indicators help us understand how well the company makes profits, manages its
resources, meets its obligations, and uses its assets.

Altman Z-Score Method, a well-known model for predicting the risk of financial distress or
bankruptcy. Although it was originally created for manufacturing firms, we use it here to
examine Bajaj Finserv’s financial resilience in an illustrative way.

By combining these tools, the analysis aims to provide a clear view of Bajaj Finserv’s overall
financial health. It will highlight strengths, point out potential concerns, and suggest ways to
improve stability amid market challenges.

1. Profitability findings:

The Gross Profit Ratio (GPR) of Bajaj Finserv has stayed steady with a slight increase from
FY 2022 to 2024. This indicates that the company has kept its operational efficiency despite
changing market conditions.

The Net Profit Ratio (NPR) has also been stable during this time, pointing to effective cost
control and sustainable business growth. While financial service companies usually work with
tighter margins, Bajaj Finserv remains profitable thanks to its diverse operations in lending,
insurance, and investment management.

One key point is that the company’s profits have not experienced significant fluctuations. This
stability shows strong resilience to outside pressures like inflation, interest rate changes, or
regulatory shifts.
2. Liquidity Findings

The Current Ratio has stayed slightly above 1. This means the company has enough current
assets to cover its short-term debts. For financial institutions, this level is usually seen as
sufficient since having an extremely high ratio is not common or efficient.

The Quick Ratio is also above 1, but it is decreasing. This means the company can still meet
its short-term liabilities with liquid assets, although liabilities are growing faster than liquid
resources.

The Cash Ratio has remained below 1 throughout this period. This is normal for non-banking
financial companies and insurance firms because cash is mostly used for loans, investments,
and reserves. However, the slow decline indicates a need to boost immediate liquidity reserves
to ensure better financial flexibility.

3. Solvency Findings

The Debt-to-Equity Ratio (D/E) is still high, which is common for Bajaj Finserv’s business
model. However, it has improved, dropping from 3.00 in FY22 to 2.65 in FY24. This decrease
suggests the company is relying more on equity and retained earnings, which reduces its
financial risk.

The Interest Coverage Ratio (ICR) has grown steadily. This means that operating profits are
more than enough to cover interest expenses. This improvement shows better solvency and
increases confidence among lenders.

The Net Asset Value (NAV) per share has also consistently increased during this time. This
trend shows the company’s ability to create lasting wealth for its shareholders.

[Link]-z”

Formula

Z′′ = 6.56 X1 +3.26 X2 + 6.72 X3 + 1.05 X4

• X1 (Working Capital ÷ Total Assets) = 0.0427

• X2 (Retained Earnings ÷ Total Assets) = 0.1119
• X3 (EBIT ÷ Total Assets) = 0.0739
• X4 (Equity ÷ Total Liabilities) = 0.1390
This score puts the company in the grey or distress zone. It suggests moderate financial stress
when looked at with the developed market framework.

Z″ Score (Emerging Market Model):

When adjusted for emerging market conditions, the Z″ Score is about 4.54. This number falls
into the safe zone. It shows a lower chance of financial distress in developing economies.

• Under the developed market model, the company’s score of 1.29 points to a potentially
risky position, suggesting that solvency may be under pressure.
• In the emerging market adaptation, the score of 4.54 shows the company is in a safe
financial position, indicating much stronger resilience.
• The difference shows that the Altman Z-model has limitations when applied to financial
institutions like NBFCs. Their business structures differ significantly from those of
manufacturing or service firms. Therefore, these results should be viewed as suggestive
rather than definitive.

The developed market Z'' model indicates financial stress and situates the company in the
risk zone. By contrast, the emerging market model places Bajaj Finserv in the safe zone,
indicating that it has relatively sound financial stability in conditions more akin to India
and other economies similar to India.

This point, of course, also illustrates an important caveat: the principal and popular Altman
Z-score was developed for manufacturing companies in a developed economy. Even though
readily available, the majority of Altman Z-scores for a financial institution using their
lending business model, relying on leverage and regulatory capital and not an asset–liability
model, are often incomparable.

Consequently, while the emerging market model is a better representation and therefore a
more valid and credible measure of the financial health for Bajaj Finserv, part of the
analysis should not take place in isolation. To get a more good picture of the financial health
for Bajaj Finserv the Z score should be complemented by the following measures:

• Profitability ratios (Net Profit Margin, ROA, ROE) to measure how well they are
achieving earnings
• Liquidity ratios (Current, Quick, Cash Ratios) to measure short-term strength
• Solvency ratios (Debt-to-Equity, Interest Coverage) to measure long-term strength
• Growth measures (Stakeholder value creation through NAV, revenue growth
 By linking the Z-score to the financial measures, analysts and investors could put together
an analysis that is more comprehensive.

SUGGESTIONS:
1. Strengthen liquidity Buffers: Maintain strong equity buffers to reduce financial risk and
satisfy regulators.

2. Revenue diversification: To lessen the company's reliance on interest income, raise the
percentage of revenue from fees and services.

3. Increased profitability and operational efficiency will guarantee that earnings can
comfortably cover interest costs, resulting in stronger interest coverage.

4. Effective risk management: To preserve financial stability, closely monitor loan

quality, make sufficient provisions, and handle non-performing assets.

5. Digital innovation: To draw in more clients and cut expenses, make additional
investments in financial technology.

CONCLUSION

Overall financial strength is shown by Bajaj Finserv. Over the last three years, the company
has been able to sustain consistent profitability and a healthy level of liquidity, which is
indicative of good management practices and a dominant market position in the financial
services industry. Even though the company has a lot of leverage, this is not a sign of financial
weakness but rather a structural characteristic of non-banking financial companies (NBFCs).
Because NBFCs' business model is centred on borrowing money and lending it out, they are
built to function with higher levels of debt than manufacturing or industrial companies.
Therefore, having large liabilities should not be seen as a sign of distress but rather as a normal
aspect of the business's operations.

Bajaj Finserv looks good when it comes to paying its short-term debts. Its current ratio is above
2, which is a good sign. The quick ratio is also okay, but it has dropped a bit from before. This
means the company can still cover its immediate debts with what it has on hand. Still, the fact
that the quick and cash ratios are going down might mean they need to keep more cash or easily
sellable investments around. Keeping enough cash can help the company when things get
rough, like if the economy slows down, the rules change, or they suddenly need more money.
The Altman Z-score gives you something to think about. If you use the formula for developed
countries, the company gets about 1.29. That puts it in a grey zone, meaning there might be
some financial risk. But, if you use the formula for growing countries, which changes things a
bit for different markets, Bajaj Finserv scores around 4.54, which is pretty safe.

This shows that the Altman model has its limits. It was first made for factories, not banks or
insurance companies. So, even if one formula makes you worry a bit, it doesn't mean Bajaj
Finserv is in real trouble.

If you look at what's happening in the business world, Bajaj Finserv seems strong. It does a lot
of things like lending money, selling insurance, and handling investments. That means its risk
is spread out. If one part of the business has a bad time, the other parts can help keep things
steady. The company has steadily made more money, which means it can change with the
market and stay competitive. And, because more people in India want financial services and
are using the internet, Bajaj Finserv has a chance to get even stronger.

So, Bajaj Finserv looks pretty solid financially. They're making good money, have enough cash
on hand, and while they do have a good amount of debt, it's normal for their type of business.
The Altman Z score brings up a couple of warnings, but keep in mind that this score isn't
always the best way to judge finance companies. Overall, the company seems tough and ready
to grow if they watch their debt, handle risks well, and keep boosting their profits. If they play
it smart and keep up with tech, Bajaj Finserv should stay on top in India's finance world and
keep growing steadily over time.

So, ratio analysis tells us Bajaj Finserv Ltd. is doing great financially. They've set themselves
up well for the future, which is good for investors and means they can keep expanding in
the finance world.
 BIBLIOGRAPHY AND ANNEXURE
Bibliography:

Books

1. Khan, M. Y., & Jain, P. K. (2018). Financial Management: Text, Problems and Cases

(8th ed.). McGraw Hill Education.

2. Pandey, I. M. (2015). Financial Management (11th ed.). Vikas Publishing House.

3. Chandra, P. (2020). *Financial Management: Theory and Practice* (10th ed.)..McGraw

Hill Education.

[Link] G Zikmund Business Research Methods - Thomson South Western Publication

India 7th edition.

Websites & Reports

Moneycontrol. (2024). Check out Bajaj Finserv's financial numbers and how they're doing.

Retrieved from: [Link]

National Stock Exchange of India. (2024). Get company financial info and stock reports from:

[Link]

Bajaj Finserv Ltd. Annual Reports (2022-2024) [Consolidated Financial Statements].

Retrieved from: [Link]

Articles / Journals

Reddy, K. S. (2015). Financial ratios as the performance evaluators: A review. International

Journal of Applied Financial Management Perspectives, 4(2), 1375-1386.

Srinivasan, V. (2019). Ratio analysis as a tool for the financial performance evaluation in the
Indian companies. Journal of the Finance and Accounting Research, 8(1), 22-30.
Annexure 1
Annexures 2.