On March 18, 2025, Bajaj Finserv’s stock saw a 2% drop following the announcement of its acquisition of Allianz’s 26% stake in Bajaj Allianz Life and General Insurance. This move comes after 24 years of partnership between Bajaj and Allianz. Let’s explore the details of the acquisition and what it means for Bajaj Finserv.
Bajaj Finserv acquires Allianz’s 26% stake
Bajaj Finserv, one of India’s leading financial services companies, has signed a deal to acquire a 26% stake from Allianz SE in its two insurance businesses: Bajaj Allianz Life Insurance Company (BALIC) and Bajaj Allianz General Insurance Company (BAGIC). The total consideration for this acquisition stands at ₹24,180 crore, with ₹13,780 crore allocated to BAGIC and ₹10,400 crore for BALIC.
This acquisition will increase Bajaj Finserv’s stake in both insurance entities to 100%, up from its current 74%. The deal, subject to regulatory approvals, will terminate the 24-year-old joint venture between the Bajaj Group and Allianz SE, marking a new chapter for both businesses.
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Impact on Bajaj Finserv’s stock price
Following the announcemen+-t, Bajaj Finserv’s stock dropped nearly 2%, hitting an intraday low of ₹1,836.15 on the BSE. The decline came after a strong rally in previous months, with Bajaj Finserv shares rising 17% year-to-date. Over the past five years, the stock has delivered impressive multi-bagger returns of 192%, making it one of the top performers in its sector.
The stock has seen a surge of 42% in the last two years, despite today’s drop. This suggests that investors are generally bullish on the company’s future, even as profit-taking occurred following the announcement.
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Deal Valuation
According to Kotak Institutional Equities, the deal values Bajaj Allianz Life Insurance at ₹40,000 crore and Bajaj Allianz General Insurance at ₹53,000 crore. These valuations are slightly lower than market expectations. Kotak Equities highlighted that the deal is valued at a 28% discount to their fair value estimate for Bajaj Allianz Life Insurance.
This pricing has led some analysts to question the deal’s impact on Bajaj Finserv’s overall valuation, leading to a downgrade in the stock’s rating from “Buy” to “Add” by Kotak Equities. However, despite this, they raised the stock’s target price to ₹2,100 from ₹2,000.
Strategic benefits of the acquisition
From a strategic standpoint, the buyout provides Bajaj Finserv with full control over its insurance businesses, which could lead to increased operational flexibility and the potential to drive further growth. The acquisition will allow Bajaj Finserv to align the strategies of both insurance companies more closely with its overall business plan.
Post-acquisition, Bajaj Finserv’s stake in both insurance companies will increase to 75.01%. The remaining 24.99% will be split between Bajaj Holdings & Investment Limited (19.95%) and Jamnalal Sons Pvt. Ltd. (5.04%).
Sanjiv Bajaj, Chairman and Managing Director of Bajaj Finserv, expressed confidence that the deal would help drive value for stakeholders in the coming years. He highlighted the company’s focus on providing better access to insurance and building financial resilience across India.
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Sectorial analysis and market impact
While Bajaj Finserv’s stock showed a dip, the broader market was performing well. The BSE Sensex surged by 1% or 753 points, reflecting strong buying interest in sectors like banking, metal, and pharmaceuticals. Bajaj Finserv’s stock drop occurred amid overall market gains, but it should be noted that the financial and insurance sectors are in a transformation phase, especially with such large acquisitions.
In terms of sector performance, Bajaj Finserv operates in a rapidly expanding insurance market. With its increased control, it is poised to benefit from this growth, provided it can capitalize on the synergies and advantages that full ownership brings.
Bajaj Finserv’s stock performance
Bajaj Finserv’s stock has been a standout performer in the Indian financial services sector. While it experienced a temporary setback due to the announcement of the Allianz deal, its long-term growth prospects remain strong. The company’s diversified portfolio, which includes lending, insurance, and asset management, positions it well for future growth.
For investors, this represents an opportunity to watch how Bajaj Finserv handles its newly acquired stake and whether it can maintain its growth trajectory in the face of regulatory hurdles.
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Conclusion
The acquisition of Allianz’s stake in Bajaj Allianz marks a major shift for Bajaj Finserv, providing the company with full control over its insurance businesses. While the stock saw a slight dip following the announcement, the long-term outlook remains positive, with analysts predicting growth in the years ahead.
As Bajaj Finserv adjusts to its new role as the sole owner of its insurance businesses, investors will be closely monitoring the impact on both the stock price and the company’s financial performance.
