Bajaj Auto to hive of financial services business

The Bajaj Auto stock had risen 1.7% to Rs 2609 on Thursday, 10 May 2007, ahead of the announcement by the company that its board would meet on 17 May to consider dividing the company into manufacturing and financial services businesses to unlock shareholder value. The news hit the market after trading hours.

Dalal Street Business Analysts have valuation of Bajaj’s Financial Services Business here.

The market has been agog with talks of a split since the last two years. Transferring some of the Rs 6500-crore cash will improve the finance and insurance businesses, chairman Rahul Bajaj had said in the past.

Bajaj Auto is in both general as well as life insurance businesses through Bajaj Allianz General Insurance Company and Bajaj Allianz Life Insurance Company, respectively. Bajaj Auto holds a 74% stake in both firms with the rest held by Allianz. Bajaj Auto is also into the business of lending money through Bajaj Auto Finance, a listed entity. Bajaj Auto holds over 38% stake in Bajaj Auto Finance.

Bajaj Auto sales are on decline and the company will also announce its FY 2007 results on 17 May 2007.