The divergence between standalone and consolidated performance highlights the complex nature of Bajaj Holdings' business model as an investment holding company. Whilst the parent company's direct investment income showed volatility, the underlying portfolio companies—primarily Bajaj Auto, Bajaj Finance, and Bajaj Finserv—continued to contribute steadily to consolidated earnings. The quarter's operational revenue of ₹396.87 crores represented the highest quarterly sales figure in the company's recent history, driven by dividend income and investment realisations.
| Quarter | Net Sales (₹ Cr) | QoQ Change | Cons. Net Profit (₹ Cr) | QoQ Change | Operating Margin |
|---|---|---|---|---|---|
| Sep'25 | 396.87 | +22.24% | 1,559.02 | -55.28% | 89.05% |
| Jun'25 | 324.66 | +123.50% | 3,486.51 | +102.06% | 87.42% |
| Mar'25 | 145.26 | +14.98% | 1,725.49 | -1.31% | 71.02% |
| Dec'24 | 126.33 | -54.73% | 1,748.36 | +21.72% | 75.73% |
| Sep'24 | 279.07 | +108.63% | 1,436.36 | -10.81% | 83.44% |
| Jun'24 | 133.76 | -88.96% | 1,610.46 | -40.71% | 54.46% |
| Mar'24 | 1,211.84 | — | 2,716.12 | — | 97.10% |
Financial Performance: Volatile Earnings Mask Operational Efficiency
Bajaj Holdings' Q2 FY26 financial performance presents a paradox: whilst operational metrics reached record highs, bottom-line profitability exhibited significant volatility. Net sales for Q2 FY26 stood at ₹396.87 crores, representing a robust 42.21% year-on-year growth and 22.24% sequential improvement. This marked the highest quarterly revenue in the company's recent history, surpassing even the exceptional ₹1,211.84 crores reported in Mar'24, which was an outlier quarter driven by substantial investment realisations.
Operating profit before depreciation, interest, and tax (excluding other income) reached ₹353.42 crores in Q2 FY26, up from ₹232.85 crores in the year-ago quarter. The operating margin expanded impressively to 89.05%, compared to 83.44% in Sep'24 and 87.42% in the previous quarter. This margin expansion reflects the high-margin nature of dividend income and investment advisory services that constitute the company's core revenue streams. Employee costs remained well-controlled at ₹11.17 crores, virtually unchanged from ₹11.05 crores in Q1 FY26.
However, the standalone net profit collapsed to ₹72.41 crores in Q2 FY26 from ₹1,610.52 crores in the preceding quarter, a dramatic 95.50% sequential decline. On a year-on-year basis, standalone profit fell 61.69% from ₹188.99 crores in Sep'24. This volatility stems from the lumpy nature of investment realisations and mark-to-market gains, which fluctuate significantly quarter to quarter. The profit before tax of ₹1,975.66 crores in Q2 FY26, whilst substantial, was 46.66% lower than the previous quarter's ₹3,703.77 crores.
The tax rate normalised to 14.47% in Q2 FY26 from an unusually low 5.40% in the previous quarter, reflecting the return to a more typical effective tax rate for a holding company structure. Other income declined to ₹12.92 crores from ₹87.05 crores in Mar'25, as the previous quarter had benefited from exceptional one-time gains.
Investment Portfolio Quality: The Bajaj Ecosystem Advantage
Bajaj Holdings' fundamental strength lies not in its standalone operations but in its strategic investments in three market-leading companies: Bajaj Auto Ltd., Bajaj Finance Ltd., and Bajaj Finserv Ltd. These investments, valued at ₹73,975.61 crores as of March 2025, constitute the core of the company's balance sheet and drive long-term value creation. The investment portfolio has grown consistently, rising from ₹32,251.62 crores in March 2020 to its current level, representing a compound annual growth rate exceeding 18%.
The company's return on equity of 10.81% on average, whilst appearing modest compared to high-growth companies, reflects the holding company structure where value accrues primarily through capital appreciation of underlying investments rather than operational earnings. The latest ROE of 10.40% demonstrates reasonable capital efficiency given the business model. Importantly, Bajaj Holdings maintains a debt-free balance sheet with net debt to equity at zero, providing financial flexibility and eliminating leverage-related risks.
⚠️ Earnings Volatility: A Feature, Not a Bug
For holding companies like Bajaj Holdings, quarterly earnings volatility is inherent to the business model. Standalone profits fluctuate based on timing of dividend receipts, investment realisations, and mark-to-market adjustments. Investors should focus on consolidated earnings and the long-term performance of underlying portfolio companies rather than quarter-to-quarter standalone profit movements. The true value lies in the appreciation of investments in Bajaj Auto, Bajaj Finance, and Bajaj Finserv, all of which maintain leadership positions in their respective sectors.
Shareholder funds expanded to ₹62,687.55 crores as of March 2025 from ₹54,247.51 crores in the previous year, driven by retained earnings and fair value gains on investments. The book value per share stood at ₹5,632.81, providing a tangible asset backing that underpins the company's valuation. Current liabilities of ₹15,088.31 crores primarily reflect dividend payables and other operational obligations, with minimal financial debt.
Cash Flow Dynamics: Investment Cycle Drives Negative Operating Cash
Bajaj Holdings reported negative operating cash flow of ₹1,956.00 crores for FY25, a stark reversal from positive ₹1,941.00 crores in FY24. This deterioration stemmed from a substantial increase in working capital requirements, which consumed ₹2,614.00 crores compared to a modest ₹67.00 crores addition in the prior year. For a holding company, negative operating cash flow often reflects the timing of dividend receipts and investment realisations rather than operational distress.
Cash flow from investing activities turned positive at ₹3,054.00 crores in FY25, indicating net realisations from the investment portfolio. This contrasts with the previous year's negative ₹471.00 crores, suggesting the company monetised certain investments during the year. Financing cash outflow of ₹1,054.00 crores primarily reflected dividend payments to shareholders, maintaining the company's commitment to returning capital whilst preserving the core investment portfolio.
| Metric (₹ Cr) | FY25 | FY24 | FY23 | FY22 |
|---|---|---|---|---|
| Operating Cash Flow | -1,956.00 | 1,941.00 | 1,727.00 | 1,609.00 |
| Investing Cash Flow | 3,054.00 | -471.00 | -136.00 | -150.00 |
| Financing Cash Flow | -1,054.00 | -1,455.00 | -1,586.00 | -1,459.00 |
| Net Cash Change | 43.00 | 13.00 | 3.00 | 0.00 |
Peer Comparison: Premium Valuation With Moderate Returns
Within the holding company sector, Bajaj Holdings occupies a unique position as the second-largest player by market capitalisation at ₹1.34 lakh crores, trailing only Bajaj Finserv. The company's valuation metrics reveal a mixed picture when compared to peers. With a price-to-earnings ratio of 18.85x, Bajaj Holdings trades at a significant discount to Choice International (89.30x) and Mahindra & Mahindra Financial Services (53.20x), but at a premium to JSW Holdings (150.56x is an outlier due to minimal earnings).
| Company | P/E (TTM) | P/BV | ROE % | Div Yield % | Debt/Equity |
|---|---|---|---|---|---|
| Bajaj Holdings | 18.85 | 2.13 | 10.81 | 0.78 | 0.00 |
| Bajaj Finserv | 33.60 | 4.49 | 12.68 | 0.05 | 4.92 |
| TVS Holdings | 20.80 | 5.42 | 16.77 | 0.63 | 5.31 |
| Choice Intl. | 89.30 | 14.78 | 14.30 | — | 0.45 |
| JSW Holdings | 150.56 | 0.56 | 0.84 | — | 0.00 |
| Mah. Scooters | 53.20 | 0.50 | 0.75 | 1.53 | 0.00 |
The price-to-book ratio of 2.13x positions Bajaj Holdings at the lower end of the peer spectrum, well below Bajaj Finserv (4.49x), TVS Holdings (5.42x), and Choice International (14.78x). This relatively modest P/BV multiple reflects market scepticism about the holding company discount, where the sum of parts typically trades below the value of underlying investments. However, the company's ROE of 10.81% lags behind TVS Holdings (16.77%), Bajaj Finserv (12.68%), and Choice International (14.30%), justifying the valuation discount to some extent.
Bajaj Holdings' competitive advantage lies in its zero-debt structure, matching only JSW Holdings and Mahindra Scooters in this regard. The dividend yield of 0.78%, whilst higher than Bajaj Finserv's 0.05%, remains below Mahindra Scooters' 1.53%, reflecting the company's strategy of retaining capital for investment opportunities rather than maximising current income distribution.
"The holding company discount persists, but the quality of underlying investments in Bajaj Auto, Bajaj Finance, and Bajaj Finserv provides a compelling long-term value proposition despite near-term earnings volatility."
Valuation Analysis: Very Expensive Despite Recent Correction
At the current price of ₹12,037.20, Bajaj Holdings trades at a P/E ratio of 19x, which appears reasonable on the surface. However, the company's proprietary valuation grade stands at "Very Expensive," reflecting stretched multiples relative to historical averages and intrinsic value estimates. The stock reached a 52-week high of ₹14,873.20 in recent months before correcting 19.07% to current levels, yet remains 18.89% above its 52-week low of ₹10,125.00.
The EV/EBITDA multiple of 159.51x appears extraordinarily high, but this metric holds limited relevance for holding companies where operating EBITDA doesn't capture the true earnings power of the investment portfolio. Similarly, the EV/Sales ratio of 134.29x seems inflated, but revenue figures for holding companies primarily reflect dividend income rather than operational sales, making traditional valuation metrics less applicable.
The price-to-book ratio of 2.13x represents a 113% premium to book value of ₹5,632.81 per share. This premium reflects market recognition of the quality of underlying investments, though it has compressed from higher levels seen in early 2024. The valuation grade history shows the stock moved from "Attractive" to "Very Expensive" in February 2024 as the price rallied sharply, and has remained in expensive territory despite the recent correction.
Based on the current valuation metrics and the holding company's business model, a fair value estimate would place the stock around ₹10,500-11,000, implying 10-13% downside from current levels. This estimate factors in the intrinsic value of underlying investments, the holding company discount typically ranging 15-25%, and the modest return on equity of 10.81%.
Shareholding Pattern: Stable Base With Minimal Promoter Holding
Bajaj Holdings exhibits an unusual shareholding structure with zero promoter holding, a characteristic shared by few large-cap Indian companies. The absence of a controlling promoter stems from the company's evolution from the original Bajaj Auto entity, with ownership now distributed across various Bajaj family trusts and entities, none of which individually qualify as promoters under regulatory definitions. This structure provides both advantages—professional management without promoter interference—and concerns regarding concentrated decision-making authority.
| Category | Sep'25 | Jun'25 | Mar'25 | QoQ Change |
|---|---|---|---|---|
| Promoter | 0.00% | 0.00% | 0.00% | — |
| FII | 10.33% | 10.31% | 10.56% | +0.02% |
| Mutual Funds | 6.05% | 6.05% | 5.98% | — |
| Insurance | 0.88% | 1.12% | 1.14% | -0.24% |
| Other DII | 0.37% | 0.27% | 0.17% | +0.10% |
| Non-Institutional | 30.90% | 30.78% | 30.69% | +0.12% |
Foreign institutional investors hold 10.33% as of September 2025, showing marginal improvement from 10.31% in the previous quarter but down from 10.89% a year ago. The gradual decline in FII holding from 10.89% in Sep'24 to current levels suggests cautious foreign investor sentiment, possibly reflecting concerns about valuation or preference for direct investments in underlying portfolio companies rather than the holding company structure.
Mutual fund ownership remained stable at 6.05% in Q2 FY26, with 31 mutual fund schemes holding positions. This represents a gradual increase from 5.40% in Sep'24, indicating growing domestic institutional confidence. Insurance company holdings declined to 0.88% from 1.27% a year ago, suggesting institutional profit-booking at elevated valuations. Non-institutional investors, comprising retail and high-net-worth individuals, hold 30.90%, providing a stable ownership base.
Stock Performance: Significant Underperformance In Recent Months
Bajaj Holdings' stock has delivered exceptional long-term returns but has struggled significantly in recent months. Over a five-year horizon, the stock generated remarkable returns of 348.06%, vastly outperforming the Sensex's 95.25% gain by an alpha of 252.81 percentage points. Similarly, the three-year return of 79.93% exceeded the Sensex's 37.27% by a substantial margin, demonstrating the power of compounding through quality underlying investments.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | -8.21% | +1.82% | -10.03% |
| 1 Month | -2.52% | +3.03% | -5.55% |
| 3 Months | -13.45% | +5.32% | -18.77% |
| 6 Months | +1.21% | +4.53% | -3.32% |
| YTD | +1.82% | +8.56% | -6.74% |
| 1 Year | +14.61% | +9.18% | +5.43% |
| 3 Years | +79.93% | +37.27% | +42.66% |
| 5 Years | +348.06% | +95.25% | +252.81% |
However, the near-term picture presents significant concerns. The stock declined 8.21% over the past week, underperforming the Sensex by 10.03 percentage points. The three-month return of -13.45% contrasts sharply with the Sensex's 5.32% gain, resulting in negative alpha of 18.77 percentage points. Year-to-date returns stand at a modest 1.82%, significantly lagging the Sensex's 8.56% advance.
The one-year return of 14.61% outperformed the Sensex by 5.43 percentage points, but this masks the recent deterioration in momentum. The stock trades below all key moving averages—5-day (₹12,482.84), 20-day (₹12,536.55), 50-day (₹12,666.83), 100-day (₹13,265.25), and 200-day (₹12,748.38)—indicating bearish technical positioning. The risk-adjusted return of 0.39 over one year, whilst positive, significantly trails the Sensex's 0.74, with volatility of 37.64% classifying the stock as "HIGH RISK MEDIUM RETURN."
Investment Thesis: Quality Obscured By Valuation And Momentum Concerns
The investment thesis for Bajaj Holdings rests on four pillars: valuation, quality, financial trends, and technical momentum. The current assessment reveals a mixed picture that justifies caution. The valuation grade of "Very Expensive" reflects stretched multiples despite the recent correction, with the P/BV ratio of 2.13x implying a significant premium to book value that may not be justified by the modest 10.81% return on equity.
Quality assessment presents a more favourable picture. The company earns a "Good" quality grade based on healthy five-year sales growth of 19.74%, strong EBIT growth of 25.67%, and a debt-free balance sheet. The institutional holding of 17.64% provides validation of the investment quality, though this figure has declined gradually over the past year. The underlying portfolio companies—Bajaj Auto, Bajaj Finance, and Bajaj Finserv—maintain leadership positions in their respective sectors, providing long-term value creation potential.
The financial trend classification of "Flat" for Q2 FY26 highlights the challenge of volatile quarterly earnings inherent to the holding company model. Whilst net sales reached record highs and operating margins expanded, the sharp decline in standalone profitability and negative operating cash flow in FY25 raise questions about near-term earnings sustainability. The technical trend turned "Bearish" on November 7, 2025, following a breakdown below key support levels, with all major indicators—MACD, moving averages, and KST—flashing negative signals.
Key Strengths & Risk Factors
KEY STRENGTHS
- Blue-chip portfolio: Strategic investments in market leaders Bajaj Auto, Bajaj Finance, and Bajaj Finserv provide long-term value creation and dividend income streams
- Debt-free balance sheet: Zero net debt provides financial flexibility and eliminates leverage risks, distinguishing it from leveraged peers
- Record operating margins: Q2 FY26 operating margin of 89.05% reflects high-margin dividend income and efficient cost structure
- Strong long-term returns: Five-year return of 348.06% demonstrates the power of quality underlying investments compounding over time
- Consistent dividend policy: Regular dividend payments (latest ₹65 per share) provide income whilst retaining capital for growth opportunities
- Professional management: Absence of controlling promoter enables independent, professional management focused on shareholder value
- Diversified revenue streams: Dividend income from multiple portfolio companies reduces concentration risk compared to single-investment holding companies
KEY CONCERNS
- Earnings volatility: Standalone profit collapsed 95.50% QoQ to ₹72.41 crores, highlighting the lumpy nature of investment income and realisations
- Very expensive valuation: "Very Expensive" grade indicates stretched multiples relative to intrinsic value, limiting upside potential
- Bearish technical trend: Stock below all major moving averages with negative momentum indicators suggesting further downside risk
- Modest ROE: Return on equity of 10.81% lags peers like TVS Holdings (16.77%) and Bajaj Finserv (12.68%), questioning capital efficiency
- Negative operating cash flow: FY25 operating cash outflow of ₹1,956 crores raises concerns about working capital management
- Declining institutional interest: FII holding down from 10.89% to 10.33% over past year suggests waning foreign investor confidence
- Holding company discount: Persistent discount to sum-of-parts value limits price appreciation despite quality of underlying investments
Outlook: What To Watch For Recovery Signals
POSITIVE CATALYSTS
- Stabilisation of standalone earnings with consistent dividend income from portfolio companies
- Valuation correction to "Expensive" or "Fair" grade, improving risk-reward ratio
- Technical trend reversal above 20-day and 50-day moving averages
- Increase in mutual fund and FII holdings indicating renewed institutional confidence
- Strong performance from underlying investments (Bajaj Auto, Bajaj Finance, Bajaj Finserv) lifting portfolio value
RED FLAGS TO MONITOR
- Continued decline in standalone profitability below ₹100 crores per quarter
- Further deterioration in operating cash flow in subsequent quarters
- Break below 52-week low of ₹10,125, indicating loss of technical support
- Decline in institutional holdings below 15%, suggesting loss of investor confidence
- Underperformance of underlying portfolio companies affecting consolidated earnings
The forward outlook for Bajaj Holdings hinges on three critical factors: the performance trajectory of underlying portfolio companies, valuation normalisation, and technical momentum reversal. The company's business model ensures that long-term value creation aligns with the success of Bajaj Auto, Bajaj Finance, and Bajaj Finserv. Any significant appreciation in these holdings will eventually reflect in Bajaj Holdings' market value, though the holding company discount may persist.
Near-term catalysts include potential special dividends from portfolio companies, strategic investment realisations at attractive valuations, and improved visibility on standalone earnings stability. However, the bearish technical setup suggests the path of least resistance remains downward in the near term, with support levels at ₹11,500 and ₹10,125 likely to be tested before a sustainable recovery emerges.
The Verdict: Quality Company, Wrong Entry Point
Score: 37/100
For Fresh Investors: Avoid initiating positions at current levels. The combination of "Very Expensive" valuation, bearish technical trend, and near-term earnings volatility creates an unfavourable risk-reward profile. Wait for a correction towards ₹10,500-11,000 or a technical trend reversal above key moving averages before considering entry. The quality of underlying investments is not in question, but timing matters significantly.
For Existing Holders: Consider reducing exposure on any technical bounce towards ₹12,500-12,750. Long-term holders with multi-year investment horizons may retain positions given the quality of the portfolio, but should be prepared for continued volatility and potential further downside. Set mental stop-loss at ₹10,000 to protect capital. The holding company discount is unlikely to narrow meaningfully in the near term.
Fair Value Estimate: ₹10,750 (11% downside from current levels)
Bajaj Holdings represents a classic case of a good company available at the wrong price. Whilst the underlying investment portfolio remains world-class and the balance sheet pristine, the current valuation leaves little room for error. The bearish technical setup and flat financial trend suggest patience will be rewarded. This is a "watch and wait" situation rather than an immediate buying opportunity.
Note- ROCE= (EBIT - Other income)/(Capital Employed - Cash - Current Investments)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions.
