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Bajaj Holdings & Investments Ltd (BAJHOL) ‘Diwali Special’ Idea
• Bajaj Holdings & Investments Ltd (BAJHOL) a primary investment holding company was demerged
from Bajaj Auto Ltd (BAJAUT) in 2008. All the businesses and all properties, assets, investments and
liabilities of Bajaj Auto & Bajaj Finserve (BAJFIN), other than the manufacturing undertaking and the
strategic business undertaking, now remain with BAJHOL. Post‐demerger, BAJHOL holds more than
30% shares each in Bajaj Auto and Bajaj Finserve.
• Bajaj Holdings & Investments holds majority stakes in Bajaj Auto (31.49%), Bajaj Finserve (35.61%),
Bajaj Electricals (BAJELE) (16.92%), Maharashtra Scooters (MAHSCO) (24.00%), Force Motors
(FORMOT) (19.56%), ICICI Bank (ICIBAN) (1.82%) and in many other equities as of March 2010. The
current market value of all the equity investments is valued at ` 19,798 crores. Moreover, the
company has unquoted investments in debentures, bonds, government securities and mutual funds
worth ` 2,276.8 crores.
• The long term prospects of the major investee companies look very encouraging due to their
dominant position in their sectors, mainly
�� Bajaj Auto – amongst the top 5 automobile players in India.
�� Bajaj Finserv’s growing business in finance, insurance and also a likely candidate for a
banking license.
�� ICICI Bank – India’s largest private bank.
• Holding companies generally trade at a discount of 20% to their NAVs. Peer holding companies like
Tata Investment trade at 11% discount, JSW Holdings at 3.6% discount to NAV. However, BAJHOL is
trading at a significant discount of greater than 55%.
• The value of total investments (both equity & debt) at current market price stands at ` 22,075
crores which translates into per share value of ` 2,082. At current market price of ` 865, the stock
trades at a discount of more than 57% to its NAV. We believe that the discount of such magnitude is
not justified. We have valued the strategic stakes of the company at a 50% discount and other
minority stakes at 20% (refer table below on page 2). This implies a per share valuation of ` 1,182,
an upside of 37% from CMP of ` 865.
• Taking all these factors into account, good management, strong balance sheet, good dividend yield
of 3.5% and attractive valuations, we believe the current discount of 57% to NAV should narrow
down in the near future, hence we recommend a Buy with a target price of ` 1,182.
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