Top 5 Mutual Funds Betting Big on Bajaj Group Stocks

February 26, 2024 Mutual Fund

Bajaj is a well known brand and a household name in India, it has established itself as a prominent player across various sectors in the market. The Bajaj Group is a prime example of successful diversification in the Indian corporate landscape.

Since its modest origins in 1926, the group has grown into a conglomerate which comprises numerous businesses that operate in seven different industries, including steel, home appliances, consumer durables, consumer financing, autos, and more.

Bajaj Group becomes the fifth corporate house in India to reach the milestone of having a market capitalisation of more than Rs 10 lakh crore. Bajaj Auto Ltd. and Bajaj Finance Ltd. have been major contributors to the group’s valuation. Bajaj Auto has gained momentum since the debut of Triumph Bikes, while Bajaj Finance’s shares have surged as a result of recent fundraising efforts and good financial performance in H1 FY24.

Since April 2023, the market valuation of the group has increased by 41%, with Bajaj Auto leading the way with a 63% increase. Financial entities account for 73% of the combined valuation, including Bajaj Finserv and Finance.

Heritage of Bajaj Group

The Bajaj Group is a prominent Indian multinational conglomerate founded in 1926 by Jamnalal Bajaj, a freedom fighter, philanthropist and a close confidant of Mahatma Gandhi. The Bajaj Group is one of India’s most respected and renowned business houses. The journey started 90 years ago with a sugar factory in Lakhimpur Kheri, Uttar Pradesh.

Today, Bajaj Hindusthan Sugar Ltd. is India’s top sugar manufacturing company and is counted among the leaders in this industry globally.

After Jamnalal passed away in 1942, Kamalnayan Bajaj, the elder son, took up the mantle of the businesses. He did a stellar job managing the group companies; he expanded the business by branching into the manufacture of scooters, three-wheelers, cement, alloy casting, and electricals.

Later, Ramkrishna Bajaj, the younger of the Bajaj sons, complimented his brother’s business acumen. He was a leader who approached the business from a different, more holistic perspective. Under the leadership of Rahul Bajaj, son of Kamalnayan Bajaj, the conglomerate has witnessed remarkable expansion without losing sight of its commitment to society. Unfortunately, the patriarch died in February 2022 at age 83.

Currently, Niraj Bajaj, son of Ramkrishna Bajaj and cousin brother of Rahul Bajaj, is leading the Bajaj Group from the front. He is also a board member of Bajaj Auto.

With growth as the ultimate vision, the group has diversified into a variety of business areas. Over the past century, it has grown from a single sugar factory into a diversified powerhouse, encompassing over 40 companies across various sectors. Today, it is one of India’s most respected and renowned business houses.

Here’s a List of Stocks under the Bajaj Group Companies:

• Bajaj Auto Ltd.
• Bajaj Consumer Care Ltd.
• Bajaj Electricals Ltd.
• Bajaj Finance Ltd.
• Bajaj Finserv Ltd.
• Bajaj Hindusthan Sugar Ltd.
• Hercules Hoist Ltd.
• Bajaj Holding & Investments Ltd.
• Maharashtra Scooters Ltd.
• Mukand Ltd.

Should One Consider Investing in Bajaj Group Stocks?

The Bajaj Group operates in various sectors, including automobiles, finance, consumer durables, and insurance. Several Bajaj Group companies hold leadership positions in their respective sectors. This diversification helps mitigate risk, as a downturn in one sector may be offset by growth in another. In addition, a strong market presence can translate to sustained growth and profitability. Also, brand recognition can give the company a competitive edge and drive future growth.

The Indian economy is expected to continue growing in the coming years, which could benefit Bajaj Group companies operating in various sectors. The group’s focus on innovation and new product launches indicates its commitment to future growth.

The Bajaj Group companies have a history of consistent growth and profitability. This financial stability may provide investors with confidence in their investment’s long-term viability. Recent performance has been particularly notable.

The Bajaj Group enjoyed a strong performance in the last year, 2023. Several group companies witnessed significant growth, with some stocks delivering substantial returns.

• Bajaj Auto achieved record-breaking net sales of around Rs 35,359 crore, domestic sales of both motorcycles and three-wheelers witnessed significant growth. However, exports declined due to various external factors.
• Bajaj Finserv delivered strong growth in consolidated total income and profit after tax, driven by the robust performance of its subsidiaries, particularly Bajaj Finance.
• Bajaj Finance emerged as India’s fastest-growing non-banking financial company (NBFC), driven by loan growth and an increasing customer base.

This impressive performance can be attributed to strong domestic demand across various sectors like automobiles, consumer durables, and financial services, where Bajaj Group has a strong presence, market leadership, and a focus on innovation, further driving sales and profitability. This has brought the Bajaj group stocks into the limelight and gained decent investor traction.

While the Bajaj Group’s remarkable performance and future potential make it an attractive investment option, actively picking individual stocks can be complex and risky. For investors seeking exposure to the group’s diverse businesses and managed by experienced professionals, investing in mutual funds with substantial holdings in Bajaj Group companies can be a compelling alternative.

[Read: Relying on Star Ratings to Pick Best Mutual Funds? Read This]

Here’s the List of Top 5 Mutual Funds Holding a Higher Allocation to ‘Bajaj group Stocks’

#1 – Axis Focused 25 Fund (Focused Fund)

Axis Focused 25 Fund invests predominantly in a concentrated portfolio of equity & equity-related instruments of up to 25 companies. The scheme invests across the market cap, and as of January 2024, it holds 78.45% allocation in large caps and 17.28% allocation in mid-caps.

Currently, the scheme holds an AUM of Rs 13,861.46 crore and is benchmarked against the Nifty 500 index.

Axis Focused 25 Fund – Allocation to Bajaj Group Stocks

Data as of January 31, 2024
(Source: ACE MF)

Axis Focused 25 Fund holds a maximum exposure of 8.10% in stocks of Bajaj Finance Ltd., which is one of the leading non-banking financial companies in India with a customer base of 73 million and holds assets under management worth ₹270,050 crore.

The scheme also holds significant allocation to Bajaj Finserv & Bajaj Auto Ltd. stocks, which are among the top 10 holdings on the list. Currently, the overall exposure to Bajaj Group Stocks accounts for 16.97% of the scheme’s assets.

#2 – Tata Quant Fund (Thematic Fund)

Launched in January 2020, Tata Quant Fund invests predominantly in equity and equity-related instruments selected based on a quantitative model (Quant Model). It currently has an AUM of Rs 55.35 crore and is benchmarked against S&P BSE 200- TRI.

However, since the scheme is launched a few years ago, it does not have a long performance track record of 5-10 years. Thus, investors may consider their suitability and invest only after analysing a proven performance track record.

Tata Quant Fund – Allocation to Bajaj Group Stocks

Data as of January 31, 2024
(Source: ACE MF)

The scheme invests across the market cap, and as of January 2024, it holds 84.32% allocation in large caps and 9.53% allocation in mid-caps. Tata Quant Fund holds a high exposure of 9.31% in Bajaj Finance Ltd. and Bajaj Finserv at 5.21%, both of which are amongst the top 10 holdings. Currently, the overall exposure to Bajaj group stocks accounts for 14.51% of the scheme’s assets.

#3 – DSP Banking & Financial Services Fund (Sectoral Fund)

Launched in December 2023, the DSP Banking & Financial Services Fund invests in a concentrated portfolio of equity & equity-related instruments of companies engaged in the banking and financial services sector. As of January 2024, the fund has 63.63% in large caps, 11.59% in mid-cap stocks, and 9.94% in small-cap stocks.

However, since the scheme has been launched a few months ago, it does not have a long performance track record. Thus, investors may consider their suitability and invest only after analysing a proven performance track record.

DSP Banking & Financial Services Fund – Allocation to Bajaj Group Stocks

Data as of January 31, 2024
(Source: ACE MF)

The highest exposure is in Bajaj Finserv Ltd., a leading NBFC in the BFSI sector. It provides a variety of loans, including personal, home, business, auto, and gold loans. It also offers unique products like the Insta EMI Card, showcasing its dedication to customer-friendly solutions.

Being a sectoral fund, it also has allocation to another market leader from the Bajaj group of companies – Bajaj Finance Ltd., which provides financing solutions for individuals and businesses. DSP Banking & Financial Services Fund has an overall allocation of 14.22% to Bajaj Group Stocks.

#4 HDFC Transportation and Logistics Fund (Thematic Fund)

The scheme endeavours to create a substantially diversified portfolio by investing predominantly in equity and equity-related securities of companies engaged in the transportation and logistics sectors.

Launched in August 2023, the scheme currently holds an AUM of Rs 724.13 crore and is benchmarked against the Nifty 50 Index. However, since the scheme was launched in the last year, it has no long performance track record.

HDFC Transportation and Logistics Fund – Allocation to Bajaj Group Stocks

Data as of January 31, 2024
(Source: ACE MF)

In terms of Bajaj Group Stocks, this scheme holds a major allocation of around in Bajaj Auto Ltd. It is the first stock with high weightage amongst the top 5 holdings. Bajaj Auto is an Indian multinational automotive manufacturing company based in Pune. It is a leading manufacturer of bikes, electric 3-wheelers, scooters and auto rickshaws. The popular products offered by the company are Avenger, Pulsar, Discover, Platina, CT, KTM, RE, Maxima, and Chetak.

The scheme invests across market segments such as – 47.45% allocation into large-cap stocks, 17.84% and 26.38% in mid and small-cap stocks, respectively. Do note it has a higher allocation to mid and small-cap stocks, which are highly risky and sensitive to market fluctuations. Investors may consider their suitability before investing.

#5 UTI Transportation and Logistics Fund (Thematic Fund)

The scheme endeavours to create a substantially diversified portfolio by investing predominantly in equity and equity-related securities of companies engaged in the transportation and logistics sectors.

Currently, the scheme holds an AUM of Rs 2868.56 crore and is benchmarked against the Nifty 50 Index.

UTI Transportation and Logistics Fund – Allocation to Bajaj Group Stocks

Data as of January 31, 2024
(Source: ACE MF)

In terms of Bajaj Group Stocks, this scheme holds a major allocation of around in Bajaj Auto Ltd. It is amongst the top 5 holdings of the scheme assets. Since early 2021, a recovery has been in place and in 2023, the company accelerated, hitting a new all-time record with 3.6 million sales, driven by an impressive domestic performance.

The scheme invests across market segments such as – 61.51% allocation into large-cap stocks, 26.35% and 6.60% in mid and small-cap stocks, respectively.

Although Sectoral/Thematic mutual funds could be a good diversifier to your portfolio, reaching their potential takes at least a few years. Investors may consider taking a plunge into these mutual funds only after thorough market research and assessing their suitability based on risk tolerance, investment horizon and goals.

[Read: India’s Mutual Fund Growth Story: 2023 Trajectory and Future Outlook]

To conclude…

The future seems bright for the Bajaj Group given its excellent 2023 performance, diverse portfolio, and commitment to innovation. However potential challenges like rising interest rates and global economic uncertainties necessitate careful consideration.

Ultimately, while investing in Bajaj Group Stocks holds potential, thorough research, understanding individual company financials, and aligning decisions with your risk tolerance are crucial for making informed investment choices.

This article first appeared on PersonalFN here