Apr 8, 2003|
Bajaj Auto: FY03 volume numbers
FY03 has been a eventful year for Bajaj Auto. The company has been riding on the back of success of its models like 'Pulsar' and 'Boxer AR'. In the process, it has gained market share in a otherwise competitive motorcycle segment. Total volumes for FY03, inclusive of motorcycles, geared/ungeared scooters, step-thrus and three wheelers, have risen by 6% to 1.4 m units.
While the volume growth of the motorcycle segment was in line with our estimates (actual growth of 32% as against our projections of 30%), the company has under performed on the geared/ungeared scooters front. The shift in preference away from geared scooter continued in FY03 thus resulting in a 35% decline in full year unit sales. We expect the company to have lost market share in the ungeared scooter market due to lack of competitive models (down 9% YoY). Both LML and Honda Motorcycles have strengthened their foothold in FY03 after the launch of 'Nova' and 'Dio' respectively. That said, Bajaj Auto's 'Spirit', the ungeared scooter, commands around 25% market share in the below 100 cc category.
(*FY03 over FY02) (Source: Bajaj Auto website)
On the motorcycles segment front, 'Boxer' has performed well and has extended its market share to 45% of entry-level market, which is estimated at 102,000 units (35% of total motorcycle sales). But growth was primarily led by 'Pulsar', the premium-end motorcycle. As against the company's estimate of 10,000 units per month at the beginning of the fiscal year, the model notched around 17,000 units per month in 3QFY03. Encouraged by the same, Bajaj was planning to ramp up sales to 25,000 units per month by March 2003. Following the launch of 'Caliber 115', the executive segment motorcycle' in February 2003, the company has steadied its presence in this market (accounted for 56% of industry sales in FY02). The new model has registered unit sales of 25,706 units for March 2003 (35% of March motorcycle sales).
FY03 also saw a sharp rise in three-wheeler demand. For the first nine months of FY03, the market grew by 23% YoY. While Bajaj has been dominating the passenger carrier market, moving trucking terminals out of city area is expected to translate into increased demand for goods carrier. Consequently, Bajaj has commenced the commercial production of the goods carrier and the company hopes to produce 500 units per month in FY04.
The stock currently trades at Rs 507 implying a P/E multiple of 10x FY03E earnings. Bajaj Auto has targeted an overall volume growth of 10% plus in FY04. While we have assumed around 7% rise in unit sales in FY04, this is without factoring in the contribution from exports resulting out of the new world bike for Kawasaki. The bike is slated for launch in 1QFY04 and it remains to be seen how things shape on this front. While we remain positive on Bajaj Auto's long-term growth prospects, realisation growth in FY04 has come under cloud in light of an highly competitive two-wheeler sector. The expected slowdown in the economy in light of poor agricultural sector performance in FY03 could also impact demand. As apparent from the chart above, YoY growth in monthly volumes has been on the decline in FY03 (to put things in perspective, motorcycle volumes in 4QFY03 grew only by 13% in 4QFY03 as against 21% and 29% in 3QFY03 and 2QFY03 respectively).
More Views on News
Aug 14, 2017
Tata Motors Ltd disappoints again for both India and JLR business. Management commentary indicates a slow year ahead.
Aug 2, 2017
GST realted cost impacts Margins, Management expects good year ahead.
Aug 1, 2017
Good Recovery in the Scooters market, expects pick up in exports too.
Aug 1, 2017
New Export Markets picking up, Management expects good recovery in domestic Three wheeler market.
Jul 6, 2017
Ends the year on a Flat note. Expects good recovery in the exports market.
More Views on News
Aug 7, 2017
The data tells us quite a different story from the one the government is trying to project.
Aug 10, 2017
Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.
Aug 8, 2017
Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 7, 2017
Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
TRACK BAJAJ HOLDINGS & INVSTMENT
- Track your investment in BAJAJ HOLDINGS & INVSTMENT with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
- Add To MyStocks