X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Bajaj Auto: Resilient performance - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Aug 16, 2002

    Bajaj Auto: Resilient performance

    Over the last five years, one segment that has managed to outperform all other sectors in India is two-wheelers, especially motorcycles. Hero Honda's market leadership is being challenged by the likes of Bajaj Auto and TVS who have managed to defy odds by launching successful models in the last one and half years. Bajaj Auto's market share has been on the rise in the motorcycle segment. But the slowdown in the economy and the ongoing family tussle is likely to keep the stock price range bound in the immediate term.

    (Rs m) 1QFY02 1QFY03 Change
    Net sales 8,141 10,682 31.2%
    Other Income 566 346 -38.9%
    Expenditure 7,146 8,715 22.0%
    Operating Profit (EBDIT) 994 1,966 97.8%
    Operating Profit Margin (%) 12.2% 18.4% á
    Interest 12 3 -73.4%
    Depreciation 450 431 -4.3%
    Profit before Tax 1,098 1,878 71.1%
    Extraordinary items 450 - á
    Tax 340 660 94.1%
    Profit after Tax/(Loss) 1,208 1,218 0.9%
    Net profit margin (%) 14.8% 11.4% á
    No. of Shares (m) 101.2 101.2 á
    Diluted Earnings per share* 47.7 48.1 á
    P/E Ratio (x) á 9.1 á
    (* annualised) á á á

    Bajaj Auto reported a sharp spurt in sales in 1QFY03. The turnover growth of 31% was primarily led by robustness in motorcycle sales, especially after the launch of 'Pulsar' that has received overwhelming response. Apart from 'Pulsar', 'Boxer' is the other key volume driver and is estimated to account for more than 50% of unit sales. 'Eliminator', the other high-end model, is also performing well. However, its contribution to overall motorcycle volumes is still insignificant. On the other hand, the company continues to face a difficult time on the scooters front, which is Bajaj's cash cow. While geared scooter volumes are lower by 31%, ungeared scooter sales have also declined, which vindicates the shift in demand pattern towards motorcycles.

    The company's step-thrus has been losing sheen over the last three years and the decline in volume sales have been in line with expectations. Three wheeler sales in 1QFY03 is impressive led by two factors, higher demand from CNG based vehicles in key metropolitan cities where pollution norms have been tightened and new products in the goods-carrier segment. Despite a spurt in motorcycles, overall unit sales has gone up only by 16% in 1QFY03 due to dismal performance of its remaining divisions.

    Volume break-upů
    (Nos) 1QFY02 1QFY03 Change
    Motorcycles 119,570 216,376 81.0%
    Scooters-Geared 123,974 85,420 -31.1%
    Scooters-Ungeared 15,665 13,138 -16.1%
    Step thrus 19,358 13,832 -28.5%
    Three wheelers 34,780 43,603 25.4%
    Total 313,347 372,369 18.8%

    Bajaj has benefited in a large way by increasing the contribution of higher-end models like 'Pulsar' that has benefited in terms of improved realisations. We expect realisation to increase by around 3%-5% in FY03 for the motorcycle division. Profit growth at the net level is stagnant on account of higher tax outflow (effective tax rate has gone up to 35% in 1QFY03 as against 21% last year). The company received Rs 450 as premium on insurance joint venture from Allianz in 1QFY02. Excluding this adjustment, net profits have actually risen by 60% in 1QFY03.

    The stock currently trades at Rs 439 implying a P/E multiple of 9.1x 1QFY03 annualised earnings. On peer valuation basis, valuations are on the lower side. We expect the company to register a 14% rise in sales in FY03 and a significant improvement in operating margins as well. But the stock has fallen notably after the recent tussle amongst select family members. Uncertainty on this front has affected sentiment and the stock could continue to remain range bound until clarity emerges on this front.

     

     

    Equitymaster requests your view! Post a comment on "Bajaj Auto: Resilient performance". Click here!

      
     

    More Views on News

    Tata Motors Ltd: Another Disappointing Quarter, Management fails to Perform! (Quarterly Results Update - Detailed)

    Aug 14, 2017

    Tata Motors Ltd disappoints again for both India and JLR business. Management commentary indicates a slow year ahead.

    Maruti Suzuki Ltd: Bumpy First Quarter. GST dents Margins! (Quarterly Results Update - Detailed)

    Aug 2, 2017

    GST realted cost impacts Margins, Management expects good year ahead.

    Hero Motocorp Ltd: Riding on the Scooters Growth, Maintains Margins! (Quarterly Results Update - Detailed)

    Aug 1, 2017

    Good Recovery in the Scooters market, expects pick up in exports too.

    Bajaj Auto Limited: Recovery in Exports but Domestic Disappoints! (Quarterly Results Update - Detailed)

    Aug 1, 2017

    New Export Markets picking up, Management expects good recovery in domestic Three wheeler market.

    Bajaj Auto Limited: Finishes the Year with Headwinds. Poised for a Recovery Ahead? (Quarterly Results Update - Detailed)

    Jul 6, 2017

    Ends the year on a Flat note. Expects good recovery in the exports market.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    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: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    BAJAJ HOLDINGS & INVSTMENT SHARE PRICE


    Aug 18, 2017 (Close)

    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

    MARKET STATS