2025, Vol. 8, Issue 2

author(s)
Dhanasekar Dhamotharan, Brindha Natarajan, S Soundarya, S Rajarajeswari and K Kavyashree

abstract
Using Tobin's Q as the main analytical tool, this study looks at and contrasts the valuation dynamics of two well-known Non-Banking Financial Companies (NBFCs) in India: Bajaj Finance and Tata Capital, over the years 2015 to 2025. As a stand-in for evaluating investor perception, company performance, and strategic positioning, Tobin's Q is the ratio of a company's market value to the cost of replacing its assets. The study uses secondary data from the chosen companies' financial statements and annual reports. The results show a notable divergence in trends in valuation. From 1.50 in 2015 to 2.27 in 2025, Bajaj Finance, a publicly traded NBFC, continuously maintains a high and rising Tobin's Q, indicating strong investor trust, market premium, and growth propelled by innovation and digital lending. Tata Capital, a privately held NBFC, on the other hand, keeps its Q ratio steady at about 1.00, indicating a fair market value in line with asset replacement cost. This is characteristic of unlisted, cautious companies with little market speculation. The paper emphasises how ownership structure, market transparency, and regulatory reforms affect NBFC valuations. In addition to highlighting the strategic significance of innovation, public listing, and investor trust in generating valuation differences, it suggests that Tobin's Q is a useful valuation indicator for evaluating market sentiment and financial health in the NBFC industry.