What Bajaj Finance's Billion Dollar Fundraising Plan Mean

livemint.com:

festival season is here. And so is the season of sales and discounts. Everything from branded clothes to accessories to electronics, smartphones, and motorbikes is available on easy EMIs.

There are only a few companies that make money no matter how many customers buy which products of which brands. Any guess who they are? Well, Bajaj Finance is certainly one of them. In the financial year 2022-23, India's largest non-banking financial company disbursed 29.6 million (m) loans.

For Bajaj Finance, it was the highest ever, representing a growth of 20% over the previous year. The company operates in 3,733 locations across the country through about 155,000 distribution points. In FY23, Bajaj Finance acquired a record 11.6 m new customers through this network.

This took its existing customer franchise to 69.1 m by the end of March 2023. Now that tells you...trying to fund every other smart TV or smartphone or motorbike is no small feat. But Bajaj Finance is undisputedly the largest lender for financing discretionary spends across consumer electronics, furniture, and digital products in urban and rural India.

Now, as an investor, the question that crosses your mind is the profitability of lending at such a scale. Is the stupendous growth that Bajaj Finance has witnessed over the last decade sustainable? And is the lending being done at attractive margins and good asset quality? One look at the company's financials will tell you that it is extremely well capitalised. Plus, the return on equity of over 22% is one of the best in the industry.