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Bajaj Auto: Proving its 'Caliber'

May 14, 2002

Bajaj Auto (BAL) maintained the trend and reported an outstanding performance for the fourth quarter with a 28% rise in sales and 141% jump in pre tax profits. The company's volume sales for the quarter was also higher by 25%.

(Rs m) 4QFY01 4QFY02 Change FY01 FY02 Change
Sales 8,781 11,240 28.0% 36,900 42,214 14.4%
Other Income 565 310 -45.1% 2,739 1,813 -33.8%
Expenditure 8,019 9,062 13.0% 34,098 36,319 6.5%
Operating Profit (EBDIT) 762 2,178 185.7% 2,803 5,895 110.4%
Operating Profit Margin (%) 8.7% 19.4%   7.6% 14.0%  
Interest 23 5 -77.2% 74 34 -54.3%
Depreciation 462 457 -1.1% 1,773 1,797 1.4%
Profit before Tax 843 2,026 140.5% 3,695 5,878 59.1%
Extraordinary item (263) - - (799) 1,170 -246.4%
Tax (60) 542 - 270 1,837 580.3%
Profit after Tax/(Loss) 640 1,485 132.1% 2,626 5,211 98.5%
Net profit margin (%) 7.3% 13.2%   7.1% 12.3%  
No. of Shares (m) 101.2 101.2   101.2 101.2  
Diluted Earnings per Share (Rs)* 25.3 58.7   25.9 51.5  
P/E (at current price)   8.7     9.9  
(*annualised)            

The company's production for the fourth quarter increased by 34% and for the full year it was up by 12%. The higher growth in sales volume was contributed by a commendable rise in motorcycle sales (55% growth for the full year). Within a short span of time the company has successfully realigned its product portfolio to the market with motorcycles now constituting 55% of its total two wheeler sales in numbers. With the Boxer, Caliber, Caliber-Croma, Pulsar and Eliminator, the company is now present in all segments of the motorcycle market.

Scooter sales on the other hand, witnessed a decline. Volume sales for geared scooters were lower by 6% and ungeared scooter sales dropped by 12%. The company is taking product as well as marketing initiatives to gain numbers and market share in the ungeared segment.

Key stats...
(Nos) 4QFY01 4QFY02 Change FY01 FY02 Change
Production 256,562 344,453 34.3% 1,212,748 1,356,463 11.9%
Sales 283,083 354,067 25.1% 1,209,078 1,358,980 12.4%

During the year, the company's exports increased by 18%, accounting for a marginal 4% of total revenues. In terms of volumes, sales increased by 45% to 44,311 units. BAL is the country's No. 1 two and three wheelers exporter.

In the fourth quarter, BAL's operating margins witnessed a sharp improvement of over 1,000 basis points to 19%. This improvement in margins was a result of realigning its product portfolio with the market, greater focus on the motorcycle segment and reducing costs through initiatives in the areas of value engineering, supply chain management and tight control over the fixed costs of the company. Lower interest and depreciation costs have also contributed to higher profit growth in 4QFY02.

BAL currently trades at Rs 509 implying a P/E multiple of 10x FY02 earnings.


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