Bajaj Finserv share price drops nearly 2% on acquisition of Allianz’s 26% stake in Bajaj Allianz

Bajaj Finserv share price dropped nearly 2% on Tuesday, after the company announced the acquisition of Allianz’s 26% stake in Bajaj Allianz Life & General Insurance. Bajaj Finserv shares fell as much as 1.90% to an intraday low of ₹1,836.15 apiece on the BSE.

Bajaj Finserv said it signed a Share Purchase Agreements (SPAs) for the acquisition of 26% interest owned by Allianz SE in its insurance businesses, viz. Bajaj Allianz General Insurance Company (BAGIC) and Bajaj Allianz Life Insurance Company (BALIC).

The acquisition of Allianz SE’s stake will increase Bajaj Group’s ownership in BAGIC and BALIC to 100% from the current 74%.

The agreed consideration for 26% stake in BAGIC and BALIC is ₹13,780 crore and ₹10,400 crore respectively, Bajaj Finserv said in a regulatory filing on March 17.

The 24-year-old joint venture agreements between the Bajaj Group and Allianz SE in respect of insurance businesses will stand terminated upon the completion of the first tranche of acquisition of at least 6.1% and reclassification of Allianz from being a Promoter to Investor, it added.

Under the terms of the Share Purchase Agreements, Bajaj Finserv will acquire approximately 1.01%, Bajaj Holdings and Investment Ltd. approximately 19.95% and Jamnalal Sons Pvt. Ltd. approximately 5.04%, aggregating to 26% in each of the insurance companies.

Post acquisition, Bajaj Finserv stake will be 75.01% in both the companies.

The acquisition is subject to regulatory approvals, including approvals from the Competition Commission of India and the Insurance Regulatory and Development Authority of India, it added.

Deal Valuation

According to Kotak Institutional Equities, the deal values Bajaj Allianz Life Insurance at ₹40,000 crore, i.e., 1.4 X EV FY2026E and 1.3X FY2027E EV. Notably, Max Life and SBI Life trade at 1.7X EV FY2026E and 1.4/1.5X EV FY2027E; HDFC Life at 2.1X EV and 1.8X EV, respectively. This compares with Kotak Equities’ fair value estimates of ₹55,800 crore, i.e., 1.8X EV.

“The deal is at a 28% discount to our FV. Bajaj Allianz General Insurance is valued at ₹53000 crore, i.e., 25X earnings / 3.8X book FY2026E. ICICI Lombard, the nearest peer, trades at 29X earnings / 5.1X book FY2026E. Bajaj’s profitability is marred by excess capitalization, while the latter will likely deliver a high (~19%) RoE. We value Bajaj’s general insurance business at ₹57,500 crore. This deal values this business at an 8% discount to our FV estimate,” Kotak Equities said.

Rating Downgrade

Kotak Equities downgraded its rating on Bajaj Finserv shares to ‘Add’ from ‘Buy’, with expectations of a lower upside potential. The brokerage firm raised Bajaj Finserv share price target to ₹2,100 from ₹2,000 earlier.

Bajaj Finserv Stock Price Performance

Bajaj Finserv share price has fallen over 2% in one month, but the stock has rallied 17% on a year-to-date (YTD) basis. Over the past two years, Bajaj Finserv shares have jumped 42%, while the stock has delivered multibagger returns of 192% in five years.

At 10:15 AM, Bajaj Finserv shares were trading 1.37% lower at ₹1,846.15 apiece on the BSE.

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