IDFC vs Bajaj Finance Which Outperforms?

IDFC and Bajaj Finance are two prominent players in the financial services industry in India. IDFC Limited is a diversified financial services institution, providing a range of services including asset management, investment banking, and infrastructure financing. On the other hand, Bajaj Finance is a leading non-banking financial company, specializing in consumer finance, SME lending, and commercial lending. Both companies have shown steady growth and profitability in the past years, making them attractive options for investors looking to gain exposure in the financial services sector.

IDFC or Bajaj Finance?

When comparing IDFC and Bajaj Finance, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between IDFC and Bajaj Finance.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. IDFC has a dividend yield of 0.92%, while Bajaj Finance has a dividend yield of 0.53%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. IDFC reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%. On the other hand, Bajaj Finance reports a 5-year dividend growth of 49.63% year and a payout ratio of 0.00%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with IDFC P/E ratio at 20.07 and Bajaj Finance's P/E ratio at 27.27. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. IDFC P/B ratio is 1.30 while Bajaj Finance's P/B ratio is 4.83.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, IDFC has seen a 5-year revenue growth of -0.83%, while Bajaj Finance's is 1.90%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with IDFC's ROE at 8.92% and Bajaj Finance's ROE at 20.50%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are ₹107.36 for IDFC and ₹6752.15 for Bajaj Finance. Over the past year, IDFC's prices ranged from ₹104.50 to ₹129.70, with a yearly change of 24.11%. Bajaj Finance's prices fluctuated between ₹6187.80 and ₹7830.00, with a yearly change of 26.54%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.