Bajaj Finserv Share Price Drops Nearly 2% Amid Acquisition of Allianz’s 26% Stake in Bajaj Allianz
Mumbai, March 18 – Bajaj Finserv’s share price witnessed a nearly 2% drop on Tuesday after the company announced its acquisition of Allianz SE’s 26% stake in Bajaj Allianz Life Insurance and Bajaj Allianz General Insurance. The stock fell as much as 1.90% to an intraday low of ₹1,836.15 on the Bombay Stock Exchange (BSE).
This strategic move will make Bajaj Finserv the sole owner of both insurance ventures, increasing its stake to 100% from the previous 74%. While this acquisition strengthens Bajaj Finserv’s presence in the insurance sector, the market’s reaction indicates investor concerns over valuation and near-term financial impact.
Bajaj Finserv Acquires Allianz’s Stake – Deal Overview
Bajaj Finserv signed a Share Purchase Agreement (SPA) to acquire 26% of Allianz SE’s ownership in Bajaj Allianz General Insurance Company (BAGIC) and Bajaj Allianz Life Insurance Company (BALIC).
The financial details of the acquisition are as follows:
- BAGIC’s 26% stake: ₹13,780 crore
- BALIC’s 26% stake: ₹10,400 crore
The total deal size stands at ₹24,180 crore, making it one of the biggest buyouts in the Indian insurance sector.
With this acquisition, Bajaj Finserv’s stake will increase to 75.01% in both companies, while its subsidiaries, Bajaj Holdings and Investment Ltd. and Jamnalal Sons Pvt. Ltd., will hold the remaining shares.
The acquisition is subject to regulatory approvals from the Competition Commission of India (CCI) and the Insurance Regulatory and Development Authority of India (IRDAI).
Impact on Bajaj Finserv Share Price
Following the announcement, Bajaj Finserv shares dipped nearly 2% intraday, reflecting a cautious sentiment among investors. At 10:15 AM, the stock was trading 1.37% lower at ₹1,846.15 on the BSE.
Recent Stock Performance:
- One-month change: -2%
- Year-to-date (YTD) change: +17%
- Two-year performance: +42%
- Five-year returns: +192% (multibagger stock)
Despite this short-term decline, Bajaj Finserv has been a long-term wealth creator, delivering robust returns to investors over the past five years.
Valuation of the Deal & Market Comparison
Kotak Institutional Equities provided insights into the deal’s valuation:
| Company | Valuation (EV multiples) | Peer Comparison |
|---|---|---|
| Bajaj Allianz Life | ₹40,000 crore (1.4X FY26 EV, 1.3X FY27 EV) | Max Life (1.7X FY26 EV), SBI Life (1.4X FY27 EV), HDFC Life (2.1X FY26 EV) |
| Bajaj Allianz General | ₹53,000 crore (25X FY26 earnings, 3.8X book value) | ICICI Lombard (29X FY26 earnings, 5.1X book value) |
The life insurance acquisition was priced at a 28% discount compared to Kotak Equities’ fair value estimate of ₹55,800 crore. Meanwhile, the general insurance deal was valued at an 8% discount to its estimated fair value of ₹57,500 crore.
Bajaj’s profitability has been impacted by excess capital, which affects return on equity (RoE). However, analysts believe that this move strengthens the company’s long-term market positioning in the Indian insurance sector.
Brokerage Views & Rating Downgrade
Following the deal, Kotak Equities downgraded Bajaj Finserv from ‘Buy’ to ‘Add’, citing a lower upside potential. However, they raised the target price from ₹2,000 to ₹2,100, reflecting a moderate positive outlook despite near-term valuation concerns.
Why Did Bajaj Finserv’s Share Price Drop?
- High Acquisition Cost: Investors are concerned about the ₹24,180 crore acquisition cost, which could impact short-term earnings.
- Valuation Discount: The deal was executed at a lower valuation compared to peer companies.
- Regulatory Uncertainty: The acquisition is still subject to approvals from regulatory authorities, which adds an element of uncertainty.
- Stock Performance Adjustment: After a strong rally (17% YTD), investors may be booking profits in response to the news.
Future Outlook for Bajaj Finserv
Despite the short-term market reaction, this acquisition solidifies Bajaj Finserv’s dominance in the insurance sector. With full control over BAGIC and BALIC, the company will have greater operational flexibility and strategic control.
However, investors should monitor:
- Regulatory approvals for the acquisition.
- Financial performance post-acquisition.
- Stock movement trends post-integration.
Over the long run, Bajaj Finserv’s diversified financial services business, strong market positioning, and solid insurance portfolio are expected to drive growth.
Frequently Asked Questions (FAQs)
1. Why did Bajaj Finserv’s share price drop?
Bajaj Finserv’s stock fell nearly 2% intraday after announcing the acquisition of Allianz’s 26% stake in its insurance subsidiaries. Investors are cautious about the high deal value, valuation discount, and regulatory uncertainties.
2. How much did Bajaj Finserv pay for the Allianz stake?
Bajaj Finserv agreed to pay ₹13,780 crore for Bajaj Allianz General Insurance and ₹10,400 crore for Bajaj Allianz Life Insurance, totaling ₹24,180 crore.
3. What is the impact of this deal on Bajaj Finserv’s ownership?
After the acquisition, Bajaj Finserv’s stake will rise from 74% to 100%, giving it full ownership and control over both insurance companies.
4. How does this deal compare to competitors?
- Bajaj Allianz Life’s valuation is at 1.4X FY26 EV, lower than HDFC Life (2.1X EV) and SBI Life (1.4X EV).
- Bajaj Allianz General’s valuation is 25X earnings, compared to ICICI Lombard’s 29X earnings.
5. What is the future outlook for Bajaj Finserv?
In the short term, stock volatility may continue due to deal-related concerns and regulatory approvals. In the long term, full control over its insurance businesses could strengthen its position in the financial services sector.
Final Thoughts
Bajaj Finserv’s acquisition of Allianz’s stake is a significant move in the insurance industry, reinforcing its dominance. While the market reaction has been cautious, long-term investors should keep an eye on regulatory approvals and financial performance post-integration.
Would you invest in Bajaj Finserv after this acquisition? Let us know your thoughts in the comments!
For more market insights, follow our news.
Stay tuned for more updates and insights on the stock market! For more insights on investing in the Indian stock market, check out resource like MoneyControl, ET, NSE India.
Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.