• SEPTEMBER 7, 2000

Bajaj Auto: Motorcycles keep up volumes

Bajaj Auto Ltd (BAL) has reported a 6% YoY increase in total volumes for the period from April-August 2000. For April-August 2000 the company has sold 5,36,000 units as compared to 5,06,000 units sold in the same period of the previous year.

Overall volumes for the month of August 2000 at 114,000 units were flat as compared to the previous year. However when compared to July 2000 figures, this is a better performance as the volumes showed a decline of 1.2% in July 2000. On a month on month basis the growth is a robust 15% over July 2000.

On the motorcycle front the company sold a record 40,000 Japanese motorcycles during the month. This was an increase of 22% on July 2000 figure of 32,696.

As BAL has released the flash report for August 2000, the detailed breakup is not yet available. However as has happened in the past months, motorcycles continue to drive BAL's volumes.

  April-July 2000 April-July 99 % change YoY
Scooters 177,598 222,322 -20.1%
Sunny/Spirit 26,688 17,496 52.5%
Step Thrus 47,033 44,797 5.0%
Japanese Motorcycles 117,970 60,644 94.5%
Three-wheelers 55,343 52,502 5.4%
Total 424,632 397,761 6.8%

As margins in the motorcycle and scooterette segment are lower than traditional scooters and in future a large chunk of the sales mix will be contributed by these two segments, this will result in a pressure on the company's margins in FY01.

The company is stepping up its production capacity for motorcycles. On the negative side BAL is still sitting on a huge surplus of funds. Of its total balance sheet, cash, investments and loans and advances at Rs 38 billion account for 70%. The company has decided to use a portion of its surplus funds for buy back of shares. It could further use its surplus funds by increasing dividend payouts, and increasing its spends on research and development.

On the current price of Rs 360 , BAL is trading at 7.0x on its FY2000 EPS of Rs 51.4.

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