Gymkhana Partners' Andrei Stetsenko on Maharashtra Scooters and Indian Holdcos
Summary
Maharashtra Scooters is a roughly $2 billion listed holding company with about $4 billion of exchange-traded Bajaj shares and no debt, putting its market price near 50% of marked NAV. Andrei Stetsenko’s thesis is not a liquidation stunt: he wants the underlying businesses anyway, while discount compression is a “potential bonus down the line.”
Bajaj Finance and Bajaj Finserv provide the core compounding engine through lending, insurance, and asset management in markets Stetsenko believes remain early in their adoption curves. He expects something closer to 20% average long-term growth than 5%, but explicitly rejects a smooth annual forecast: disciplined financial companies sometimes barely grow when “pricing was getting worse” and underwriting loosens. The governing principle is simple: “Succeeding in a financial business isn’t about lending money. It’s about collecting.”
Andrew Walker’s sharpest pushback was that fast-growing lenders and insurers can manufacture growth by accepting bad risks, while new capital eventually commoditizes attractive returns. Stetsenko answered that Bajaj’s businesses have repeatedly grown more slowly than competitors when conditions deteriorated, yet compounded strongly across cycles; most Indian insurance buyers are also first-time customers rather than customers being poached through aggressive pricing. Bajaj’s insurance exposure had operated through two Allianz joint ventures until Bajaj bought Allianz out earlier that year.
The India thesis combines durable economic tailwinds with unusually labor-intensive local diligence. Stetsenko calls India the only market that gives the US “a run for its money in terms of fundamentals,” citing demographics, early-stage urbanization, infrastructure construction, and its status as the fastest-growing major economy. Stetsenko’s research process counters international-investor blindness with a database covering roughly 2,000 companies, hundreds of meetings, twice-yearly visits since 2012, a full-time local analyst, and an informal network that captures “literally every little last piece of scuttlebutt.”
Indian holding companies are closer to passive family trusts than bets on a single John Malone-style capital allocator, but the discount alone never makes one investable. Stetsenko estimates that perhaps a dozen, from a universe three or four times larger, combine sufficiently strong assets and governance; Maharashtra Scooters stands out because the Bajaj structure is intelligible and its operating companies sit only one ownership layer below. In his formulation, a “big juicy discount” is gravy, not the meal.
The potential catalyst is a convergence of regulatory pressure and changing behavior inside Bajaj itself. Since the prior fall, SEBI had begun targeting investment holding companies trading far below book value, improving dividend treatment and enabling tax-efficient distributions of underlying shares; Maharashtra Scooters’ dividend had already quadrupled over several years. More importantly, Bajaj Holdings evolved from the group’s “central bank,” whose CFO once insisted it would never sell operating-company shares, into a professionally run owner that recently sold shares and passed proceeds to shareholders.
A clean unlock could distribute Maharashtra Scooters’ listed holdings directly, while an alternative would be a premium buyout by majority owner Bajaj Holdings that clears the 90% ownership threshold. Yet Stetsenko says the thesis “doesn’t need to narrow for this to work”: the underlying holdings trade around a weighted 25 times next-year earnings, while Maharashtra Scooters provides look-through exposure near 12–13 times. Earnings growth is the base return; discount closure, though increasingly plausible, remains the upside.
Deep dive
1. Maharashtra Scooters sells blue-chip Bajaj exposure at half its marked value
Stetsenko first distinguishes Indian holdcos from Jardine Matheson, Liberty Media, or Berkshire Hathaway. Those structures ask investors to trust a particular capital allocator; Maharashtra Scooters functions more like a family trust, passively preserving economic participation for later generations of the founding family.
The balance-sheet proposition is unusually clean: “$2 billion company, $4 billion of assets, no debt.” The assets are overwhelmingly exchange-traded Bajaj company shares, not private holdings whose valuation must be negotiated, so the roughly 50% NAV discount is directly observable.
Maharashtra Scooters sits beside the larger Bajaj Holdings, its majority owner and what Stetsenko calls its “older brother.” Both provide discounted access to Bajaj Auto, Bajaj Finserv, Bajaj Finance, and smaller group holdings, without the labyrinthine ownership layers found in some Asian conglomerates.
Stetsenko places Bajaj alongside Godrej and the Murugappa group in India’s “platinum seal of corporate governance” tier. Even so, the investment begins with asset quality: “We’re not invested because of the discounts. We’re invested because we really like what they own.”
2. Financialization—not discount closure—is the primary return engine
Bajaj Finance is the largest single component of Maharashtra Scooters’ look-through value. Bajaj Finserv owns a majority of Bajaj Finance while adding insurance, asset management, and other financial businesses, giving shareholders exposure to products whose adoption has grown but remains early in India.
Stetsenko’s long-range claim is “more like 20% year on year for probably decades,” but he immediately qualifies its shape. These companies “do not grow at 20% year after year after year”; earnings may barely grow in one year and rise far more than 20% in another, with the cycle averaging out.
Walker’s pushback — worth keeping: rapid lending growth is often a warning, while fast-growing insurers may win business only by underpricing risk. Stetsenko agreed and recalled an Indian lender being criticized for lagging competitors when “pricing was getting worse, underwriting was getting looser,” precisely the conditions management refused to chase.
Bajaj’s insurance opportunity differs from mature-market switching wars because many customers are buying insurance for the first time as living standards rise. Its ventures also grew more slowly than some competitors, which Stetsenko reads as discipline; the test is not policy issuance but whether “you actually collect.”
3. Local scuttlebutt is the defense against being the foreign sucker
Walker framed the international-investing hazard through a stock that looked irresistibly cheap until a friend told him it was widely regarded as a mafia front. His “where would you buy a hammer?” test exposed whether an analyst actually understood everyday life in the market being pitched.
Stetsenko’s culturally revealing answer was that many middle-class Indians might say, “I don’t pick up a hammer; I pay people to do that,” because household labor is far cheaper. The exchange illustrated why apparently simple local-knowledge tests can themselves mislead without cultural context.
Stetsenko’s research process is the real screen: a roughly 2,000-company database containing “literally every little last piece of scuttlebutt,” built from hundreds of company meetings and an informal network of local investors, businesspeople, analysts, financial journalists, and people with inside knowledge. Stetsenko and his partner have spent two two-week periods in India annually since 2012, except during COVID, and now have a full-time local analyst.
Humility still shapes sizing: the fund owns more than 50 stocks, with its largest position usually below 4% and certainly below 5%. On Bajaj, however, Stetsenko is emphatic: “If I’m wrong about Bajaj having excellent corporate governance, then I don’t know what I’m right about.”
4. India’s opportunity is real, but only selected holdcos deserve capital
Stetsenko thinks Americans retain a “Slumdog Millionaire” image of India that is exaggerated or distorted. Mumbai instead evokes China two decades earlier: roughly a dozen metro lines under construction, a new airport, and high-speed rail, all being built within a pluralistic democracy.
His macro chain runs from favorable demographics and early urbanization to higher-productivity city employment, recurring GDP growth, and corporate earnings. He described India as the fastest-growing major economy and expected it, on his stated timeline, to eclipse Germany within roughly 18 months.
That runway does not make every discounted holdco attractive. Stetsenko likes perhaps a dozen among three or four times as many listed structures, including Cholamandalam Financial Holdings within the Murugappa group; each must combine governance with operating assets capable of prolonged compounding.
The contrast with Korea is structural: some Korean webs appear designed so 51%-owned entities control further 51%-owned entities, preserving control without equivalent capital at risk. He cites Jindal as a more convoluted Indian example, whereas Bajaj’s operating businesses sit one readily diagrammed layer beneath the holdcos.
5. SEBI and Bajaj’s own behavior have begun moving in the same direction
Since the previous fall, SEBI—India’s securities regulator—had begun pursuing reforms for “investment holding companies” trading far below reported book value. The measures do not force immediate action, but they improve dividend taxation and allow holdcos to distribute underlying shares tax-efficiently.
Walker compared the setup to Japan, where below-book and below-cash stocks languished for years until the Japanese market and regulators became serious about capital returns. His conclusion: when national authorities focus on persistent book-value discounts, those discounts can finally become actionable rather than permanent curiosities.
The Bajaj-specific change is equally important. In meetings around 2014–15 and again in 2017, Stetsenko encountered a holding-company CFO who simultaneously worked for Bajaj Auto and called the holdco “the central bank of the group,” a captive financier rather than an independently managed company.
That CFO said Bajaj Holdings and Maharashtra Scooters would “never sell any of the shares” in their operating companies. The executive ranks have since turned over, with some managerial overlap remaining, and Bajaj Holdings recently sold underlying shares and increased distributions—evidence that capital allocation is shifting toward holdco shareholders rather than the broader group’s financing needs.
6. Diffuse family ownership may now favor liquidity over entrenchment
Stetsenko’s local network sees a broader change in Indian incentives. A decade earlier, misconduct might involve siphoning money to an unlisted affiliate through nebulous charges; now status increasingly comes from being “the guy in the room who has the biggest market cap,” aligning prestige more closely with public value creation.
After four generations, Bajaj wealth is spread across more than 100 family members with different needs—marriages, homes, overseas education, or simple liquidity. Stetsenko argues that this diversity means there is no longer one monolithic family interest committed solely to preserving an illiquid structure indefinitely.
Governance remains “a bit of a monarchy”: Rahul Bajaj was the third-generation leader, while sons Rajiv and Sanjiv are the fourth-generation figures in control now, running the auto and financial sides respectively. Family disputes have occurred, but Stetsenko characterizes the top-level relationship as markedly more amicable than groups conducting weekly battles through newspapers.
His alignment argument is practical rather than sentimental: owner-managers often treat allocated capital as “their capital,” whereas prestigious professional boards can still destroy value. Walker supplied the specimen—directors with excellent résumés cannot erase an acquisition followed 18 months later by an 85% goodwill write-off.
7. The discount survives the small-float challenge, and the exit mechanics are tangible
Walker’s hardest valuation objection came from Liberty SiriusXM: the tracker appeared discounted until the structures collapsed and SiriusXM fell to the tracker’s implied price, revealing that its small float, ETF ownership, and dividend had inflated the operating stock rather than cheapened the holdco.
Stetsenko’s answer is fundamental. Bajaj Auto, Finserv, and Finance are established businesses whose EPS has doubled in all three cases, “at worst every five or six years”; their weighted valuation is around 25 times next-fiscal-year earnings, while Maharashtra Scooters cuts the effective entry multiple to roughly 12–13 times.
An unlock could be exceptionally clean because Maharashtra Scooters owns listed shares and minimal cash: it could distribute those securities pro rata and effectively liquidate. Alternatively, Bajaj Holdings could offer minorities a premium; under the rules described, a successful offer must carry ownership above 90%, letting the marginal tendering shareholder determine the clearing price.
Walker noted that Maharashtra Scooters had risen more than tenfold—perhaps fifteenfold—over the preceding decade, but Stetsenko redirected attention forward. Unlike obscure small caps that benefit from discovery and multiple expansion, Bajaj is already known; future returns rest chiefly on earnings, with a narrowing discount increasingly credible but unnecessary. His closing historical analogy: liberalization once threatened Bajaj with imports, yet exports eventually approached half of sales—“the story of this company really has been the story of India.”